Ways Your Personal Credit Score can Affect Your Business
In this high competitive world, one would feel the fragility of your business existence. Finances and reputation are two important things that business owners should protect. Your business plans can fail and profits affected if you make a wrong move with your business.
With this in mind, one is led to think about how well your personal credit score is. Your personal credit scored can affect the status of your business. Here are some of the ways that your credit score can affect 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.
Personal credit scores are checked by banks and lender before they approve of a business loan applied for. 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. And this is the reason why financial institutions turn down new loan applications if one of the individuals associated with the company has a low credit score.
However, not every lending institution check personal credit scores. They approve loan applications as long as the business has a 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. As long as you have a functional business plan or if you are already doing a steady amount of business, many individuals or investors will grant the loan the you need.
There are people who are not aware of their credit scores. You can know your credit standing through free and premium services specifically designed to keep individuals updated on the current credit standing.
Three major credit bureaus calculate the credit scores used by businesses and individuals. Three three major credit bureaus are Experian, TransUnion and Equifax. They all have slight differences when they calculate individuals’ credit scores and sometimes that results that they display are radically different. 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.
Your personal credit score can actually impact your business and success. 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.