Your Credit Score and Your Business
The business world is highly competitive, and business owners can sometimes feel the fragility of their businesses in this environment. That is why business owners should protect the interests of their business financially and by its reputation. If you make one wrong move as a business, then you cannot achieve your business plans and your bottom line can be at stake.
With this in mind, one is led to think about how well your personal credit score is. The status of your personal credit score can greatly impact your business. Below are some of the ways that credit score can impact your business.
There are many ways by which your credit score can potentially affect your business. Whether to be granted a loan or not can be affected by your personal credit score.
When deciding whether to approve a loan applied for by a business, most banks and lender check personal credit scores. It does not matter how well your business is doing, if anyone of the owners has a low credit score, it means that there is a great risk and financial burden to that individual which could affect their business operations. If there is an individual associated with the company that has a low personal credit score, most financial institutions will not approve their loan application.
However, not every lending institution check personal credit scores. Some lending institutions will still approve loan applications for businesses who are operating with sustained and consistent cash flow. A business’ history of revenue will be checked to enable them to determine if they will approve the loan application or not.
Personal credit score will not affect the granting of business finances by anonymous donors or venture capitalists. Individuals or investors usually grant a loan as long as you have a functional business plan or if your business is steadily doing well.
There are people who are not aware of their credit scores. Through free and premium services designed to keep you updated on your credit score, you can actually know your standing.
Credit scores used by businesses and individuals are calculated by three major credit bureaus. Three three major credit bureaus are Experian, TransUnion and Equifax. Their calculations are quite different to each other and they even sometimes show radically different results. However, most lenders evaluate all three credit ratings before deciding about lending you money.
If you have a low credit score today, it is important to improve on it.
Your business and success can greatly be affected by your personal credit score. If you want to make sure that you have access to credit and loans when you need them, make sure to keep your personal finance intact. It takes time, effort, and money to rebuild your credit score but it is well worth it f you want to be around for long.