Getting Down To Basics with Resources

Your Credit Score and Your Business

The business world is highly competitive, and business owners can sometimes feel the fragility of their businesses in this environment. 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.

This brings us to the question about your personal credit score. The status of your personal credit score can greatly impact your business. Below are some of the ways that credit score can impact your business.

Your business can be affected by your credit score in a number of 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. 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. 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.

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. They look at the business’ history of revenue to determine whether to provide the loan or not.

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.

There are people who are not aware of what their personal credit score is. Through free and premium services designed to keep you updated on your credit score, you can actually know your standing.

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. They all have slight differences when they calculate individuals’ credit scores and sometimes that results that they display are radically different. However, most lenders evaluate all three credit ratings before deciding about lending you money.

It is then important to improve your credit score if at present it is not in its best form.

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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