The Impact of Your Credit Score on Your Business
In this high competitive world, one would feel the fragility of your business existence. That is why business owners should protect the interests of their business financially and by its reputation. Your business plans can fail and profits affected if you make a wrong move with your business.
With this in mind, one is led to think about how well your personal credit score is. 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.
The truth is that personal credit score can potentially affect your business in many ways. Business loans can be affected by your 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.
There are lending institutions, however, that don’t check on 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.
Personal credit score will not affect the granting of business finances by anonymous donors or venture capitalists. 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. Through free and premium services designed to keep you updated on your credit score, you can actually know your standing.
There are three major credit bureaus that do this service for business and individuals. Three three major credit bureaus 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.
It is still possible to improve on your credit score if you find it rather low.
Your personal credit score can actually impact your business and 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.