Why a Credit Score Can Be a Business Asset

May 10, 2015 |

Business loans help you do away with your financial worries?If you are running a business, having a positive credit score can be a big advantage. If you are wanting to loan money, having a good credit score is imperative. How good your score needs to be, is somewhat dependable on who you are seeking a loan from. Anything less than a 640 personal score will probably make you ineligible for the major banks. If you have a score of 700, you have a good chance of getting a loan. A good credit score ultimately means that you are competent at dealing with money. For banks, this is an important quality if they are going to lend you money.

Some reputable websites advise keeping your business and personal credit scores separate. Business loan enquiries lower personal credit scores. Using your own credit score also inhibits the business from building up a strong credit score in the future. It is possible that if the business is successful, the business credit score will exceed your personal score.

If you do have a poor credit rating, it is possible to get a loan. There are lenders that are specifically suited for this type of business. However, you can expect very high interest rates until the company begins to earn money. Typically, you won’t be able to lend as much from these type of lenders. However, you will be able to loan something!

Your credit rating can also affect your business in other ways. It can determine how you appear to other companies, and ultimately this might decide if another company trades with you.

A good credit score is a good way to demonstrate the health of your company. This can give confidence to all people who interact with you; customers, suppliers, lenders, and anyone else!

One of the positives of using a credit monitoring service is that they will help you with increasing your score. Your spending patterns largely determine how your rating is determined. With slight changes to the way you approach this, your rating could improve drastically. For example, if you are even late for one payment, this can have a drastic effect on your overall rating. For some businesses, they may have the funds but are just sloppy with their timings. A little pointer in this direction, and your rating could grow dramatically.

If you are a company with emergency credit needs, a healthy rating might be the difference between saving your company or it going into liquidation. Even if you think that your rating does not affect your business at the moment, it may in the future.

As I’m sure you have figured, having a good score can be a huge asset. If you are serious about your business, I would recommend that you separate your personal credit rating from your business one. Once this happens, you can focus on increasing the profitability of your company, and, therefore, increasing the options for your company in the future. Good luck on improving that rating!

Category: Business Loans, Featured

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