Ways Your Personal Credit Score can Affect Your Business
In a highly competitive marketplace, one can know how tenuous their business existence can be. Finances and reputation are two important things that business owners should protect. One business mistakes and it can affect the growth and prosperity of your business.
How is 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 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.
There are lending institutions, however, that don’t check on personal credit scores. 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.
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. Experian, TransUnion, and Equifax are the three major credit bureaus that can calculate your credit score. Their calculations are quite different to each other and they even sometimes show radically different results. Lenders, on their own part, evaluate all three credit ratings before they give approval to your loan.
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 you have a good credit score in order to 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.