The business world is highly competitive, and business owners can sometimes feel the fragility of their businesses in this environment. 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 personal credit scored can affect the status of your business. 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. 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 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.
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. 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. They 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. 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. 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.