Ways Your Personal Credit Score can Affect Your Business
In a highly competitive marketplace, one can know how tenuous their business existence can be. It is very important that you protect your business interests in terms of finances and 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.
This brings us to the question about your personal credit score. The status of your personal credit score can greatly impact your business. Here are some of the ways that your credit score can affect your business.
The truth is that personal credit score can potentially affect your business in many ways. One of these ways is that it affects our business loans.
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. 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.
The good things is that not every lending institution does this. As long as the business is operating with sustained and consistent cash flow, these lending institutions will approve loan applications. A business’ history of revenue will be checked to enable them to determine if they will approve the loan application 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 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.
Three major credit bureaus calculate the credit scores used by businesses and individuals. They 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.
If you have a low credit score today, it is important to improve on it.
It is true that you personal credit score can impact your business and its success. Make sure to keep your personal finances intact if you want to ensure that you have access to credit and loans when you need them. Although it takes time, effort, and money to rebuild a low credit score, it is possible and well worth it so that you business will survive the competitive marketplace.