Ways Your Personal Credit Score can Affect Your Business
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. 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? Your personal credit scored can affect the status of your business. Below are some of the ways that credit score can impact your business.
There are many ways by which your credit score can potentially affect your business. Business loans can be affected by your credit score.
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. 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.
The good things is that not every lending institution does this. Some lending institutions will still approve loan applications for businesses who are operating with sustained and consistent cash flow. They look at the business’ history of revenue to determine whether to provide the loan or not.
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.
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. Three three major credit bureaus are Experian, TransUnion and Equifax. 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.
If you have a low credit score today, it is important to improve on it.
Your business and success can greatly be affected by your personal credit score. 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.