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. 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 business can be affected by the state of your personal credit score. Your business can be affected by your credit score in the following ways.
Your business can be affected by your credit score in a number of ways. 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. 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. And this is the reason why financial institutions turn down new loan applications if one of the individuals associated with the company has a low credit score.
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. A business’ history of revenue will be checked to enable them to determine if they will approve the loan application or not.
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. There are a lot of ways that you can know your credit scores and this is through free and premium services designed to keep you updated on this.
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.
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. If you want to make sure that you have access to credit and loans when you need them, make sure to keep your personal finance intact. 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.
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