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. Finances and reputation are two important things that business owners should protect. If you make one wrong move as a business, then you cannot achieve your business plans and your bottom line can be at stake.
This brings us to the question about your personal credit score. 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.
Your business can be affected by your credit score in a number of ways. Business loans can be affected by your credit score.
When there is an application for loan, banks and lenders check personal credit scores when factoring whether to give you a loan or not. Even if your business is doing great, a low credit score can indicate risk and financial burden to the individual which could impact his business operations. Many loans applications are not approved by financial institutions if there is an individual associated with the company that has a low personal credit score.
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. They look at the business’ history of revenue to determine whether to provide the loan or not.
If you are getting your business finances from individuals like anonymous donors or venture capitalists, your personal credit score will not in any way impact their moves. 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 what their personal credit score is. There are a lot of ways that you can know your credit scores and this is through free and premium services designed to keep you updated on this.
Credit scores used by businesses and individuals are calculated by three major credit bureaus. Experian, TransUnion, and Equifax are the three major credit bureaus that can calculate your credit score. When they calculate individual credit scores, there are differences and so the results are also quite different from each other. Before your loan application gets approved or not, lender evaluate all three credit ratings.
It is still possible to improve on your credit score if you find it rather low.
It is true that you personal credit score can impact your business and its success. Make sure you have a good credit score in order to have access to credit and loans when you need them. 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.