How to Avoid Your Personal Credit Score Affecting Your Business Credit
In many cases, when you apply for a business loan, your personal credit score will also have an impact on your business credit, and that means both would have to be in good shape for you to secure approval.
Still, it’s a good idea to keep your personal finances completely separate from your business finances, because depending on the corporate structure of your business, you may be able to avoid having one impact the other.
Impact of personal credit on business credit
In some cases, your personal credit score will impact a loan you’re trying to secure for your business by affecting the amount of the loan, and not necessarily the approval process itself. This means that you have to keep your personal credit history clear of bankruptcies, and any unpaid tax liens or judgments against you.
You’ll also have to avoid incurring any felony charges against you, since that will most likely be automatic grounds for disapproval when you’re applying for a loan. If you have ever been found guilty of committing financial fraud, that will also be automatic grounds for disapproval with a lender.
Traditional lenders vs alternative lenders
In the case of alternative lenders, they are less interested in your personal credit score and your business credit score, and are instead much more interested in your businesses cash flow. They’re far less interested in profit and loss statements, balance sheets, tax returns and debt ratios, than they are in the fact that your business is stable and has steady income.
When you apply for a loan from a traditional lender like a bank, chances are you’re going to have to have a credit score of 720 or better to be approved. When you apply to an alternative lender, most of those business requirements don’t even come into play, but instead the lender will focus on the stability of your business and its regular income.
Is your business credit score preventing you from obtaining financing?
If so, we may still be able to provide you with the funding you need for daily operations or to help your business grow. Contact us at ASA Capital Funding so our financial experts can advise you on how the needed funding can be obtained.