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The Impact of Your Credit Score on 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.
This brings us to the question about your personal credit score. The status of your personal credit score can greatly impact your business. Here are some of the ways that your credit score can affect your business.
The truth is that personal credit score can potentially affect your business in many 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 is very risky to business operations if a business owner has a low credit score, even if the business is doing good at present. 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. 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.
If you are getting your business finances from individuals like anonymous donors or venture capitalists, your personal credit score will not in any way impact their moves. As long as you have a functional business plan or if you are already doing a steady amount of business, many individuals or investors will grant the loan the you need.
Some people don’t even know their credit scores. Through free and premium services designed to keep you updated on your credit score, you can actually know your 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. 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 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. 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.