Ways Your Personal Credit Score can Affect Your Business
In this high competitive world, one would feel the fragility of your business existence. 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.
How is 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.
Your business can be affected by your credit score in a number of ways. One of these ways is that it affects our business loans.
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. 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.
The good things is that not every lending institution does this. Some lending institutions will still approve loan applications for businesses who are operating with 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. Three three major credit bureaus are Experian, TransUnion and Equifax. 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.
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 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.