The Impact of Your Credit Score on 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. Your business plans can fail and profits affected if you make a wrong move with your business.
How is your personal credit score? Your business can be affected by the state of your personal credit score. Below are some of the ways that credit score can impact your business.
The truth is that personal credit score can potentially affect your business in many ways. Whether to be granted a loan or not can be affected by your personal credit score.
When there is an application for loan, banks and lenders check personal credit scores when factoring whether to give you a loan or not. Even if your business is doing great, a low credit score can indicate risk and financial burden to the individual which could impact his 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.
However, not every lending institution check personal credit scores. 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.
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.
Some people don’t even know their credit scores. Through free and premium services designed to keep you updated on your credit score, you can actually know your 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. When they calculate individual credit scores, there are differences and so the results are also quite different from each other. 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.
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. If you want your business to survive for a long time, take time and effort to rebuild your credit score if it does not look great at this point in time.
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