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. One business mistakes and it can affect the growth and prosperity of your business.
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.
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.
The good things is that not every lending institution does this. 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. 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.
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.
Credit scores used by businesses and individuals are calculated by three major credit bureaus. 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.
It is still possible to improve on your credit score if you find it rather low.
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. 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.