Your Credit Score and 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. 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. 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.
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 is very risky to business operations if a business owner has a low credit score, even if the business is doing good at present. 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. They approve loan applications as long as the business has a sustained and consistent cash flow. What helps them determine whether to provide a loan or not is the business’ history of revenue.
Anonymous donors and venture capitalists don’t look at personal credit scores to lend you money for your business. Individuals or investors usually grant a loan as long as you have a functional business plan or if your business is steadily doing well.
Some people don’t even know 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.
Credit scores used by businesses and individuals are calculated by three major credit bureaus. They are Experian, TransUnion and Equifax. Their calculations are quite different to each other and they even sometimes show radically different results. Before your loan application gets approved or not, lender evaluate all three credit ratings.
It is then important to improve your credit score if at present it is not in its best form.
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.
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