A bank looks at your personal credit history if you're applying for a business loan they're trying to figure out what's risky and what's not risky and determine if anyone will default on a loan.
Entrepreneurs should be acutely aware of how their personal financial decisions could affect their business. . Many business owner, who were considering defaulting on a real estate loan because of the tough economic times had their business lines of credit pulled away from them. New business owners may not have much of a business credit line to show to a bank and need to make sure that their personal credit is strong. Any bank will run a credit report on an applicant so it's important to review your report even before you apply for a loan.
How to boost your credit score ?
A credit score of 700 is OK, but not even considered "good" these days. If your credit score falls in low 600s it will be very hard to get a loan. It's not uncommon for banks to require scores in the 800 range in order to get a loan. If your credit score falls below a 700 on all 3 credit bureaus, get a copy of your report and work on cleaning it up. Don't sugar-coat the situation. Tell the bank here's the problem and I fixed it. A business needs to show that receivables are coming in, you have a great concept and what dragged down your score was something in the past that you've changed. One of the biggest red flags on a credit report is a customer who pays utilities late. They are such basic necessities and it will immediately drag down your report if you don't keep current on all payments. If you need a free copy of your credit report, visit our website for a free trial.
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