Ways Your Personal Credit Score can Affect Your Business
In a highly competitive marketplace, one can know how tenuous their business existence can be. That is why business owners should protect the interests of their business financially and by its reputation. If you make one wrong move as a business, then you cannot achieve your business plans and your bottom line can be at stake.
How is your personal credit score? The status of your personal credit score can greatly impact your business. Your business can be affected by your credit score in the following ways.
There are many ways by which your credit score can potentially affect your business. One of these ways is that it affects our business loans.
Personal credit scores are checked by banks and lender before they approve of a business loan applied for. 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. 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.
Personal credit score will not affect the granting of business finances by anonymous donors or venture capitalists. You will be granted the loan that you need by individuals or investors if they can see a functional business plan or if you business is steadily doing well.
There are people who are not aware of 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.
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. However, most lenders evaluate all three credit ratings before deciding about lending you money.
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 to keep your personal finances intact if you want to ensure that you 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.