Your Credit Score and Your Business
In this high competitive world, one would feel the fragility of your business existence. Finances and reputation are two important things that business owners should protect. If you make one wrong move as a business, then you cannot achieve your business plans and your bottom line can be at stake.
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. 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. Whether to be granted a loan or not can be affected by your personal credit score.
Personal credit scores are checked by banks and lender before they approve of a business loan applied for. 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. Many loans applications are not approved by financial institutions if there is an individual associated with the company that has a low personal 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. A business’ history of revenue will be checked to enable them to determine if they will approve the loan application 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.
Some people don’t even know 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.
There are three major credit bureaus that do this service for business and individuals. Experian, TransUnion, and Equifax are the three major credit bureaus that can calculate your credit score. 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 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. 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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