Has your business had previous long term loans? Were they paid back? Credit impacts your business’s ability to obtain a business loan and if your credit isn’t the best, it’s going to be tougher to borrow money. Fortunately, even if your personal credit is poor that doesn’t mean it’s impossible to get a loan. There are still ways to obtain a business loan even if your personal credit is poor. So, what options are there and how good does your credit need to be?
Business and Personal Credit Scores
Despite what you think, businesses have credit scores just as much as you do. Business credit scores work with your bill payment history and available credit. The closer the score is to 100, the better chance you stand of obtaining a loan. If you have a score of 75 or less, it’s going to be tougher to borrow money. Personal credit does impact your ability to obtain a loan. If you have good credit you can use a personal loan to fund your business. You could get loans for bad credit or a personal loan.
Will Personal Credit Improve Business Credit?
Business credit isn’t boosted by personal credit. A lot of business owners make the mistake of maxing out their personal lines of credit in hopes of fixing or improving their bad business credit. Unfortunately, it doesn’t work like that, especially if your business is fairly new. Instead, you need to give the business ample time to establish a credit history. Long term loans can be a great way to obtain a loan for your business but it puts a strain on your personal finances as well. Personal credit doesn’t really improve your business credit so if you’re taking out a personal loan to improve it, it’s not wise. Read more!
Never Mix Personal and Business Credit
Thousands are tempted to mix personal lines of credit with business lines of credit and it’s understandable. Business owners believe they can boost their credit scores but when it all goes wrong, they lose whatever personal credit they had. It’s not the way to do business because it won’t benefit it in any way. Personal lines of credit won’t automatically improve the credit rating of your business; they are separate from one another. While loans for bad credit may help a business when it needs some extra capital, it won’t improve its overall credit rating. Sometimes personal credit should not be mixed with business credit.
Long Term Loans and Other Lending Solutions
Your credit needs to be in reasonable shape to become eligible for a business loan; however, lenders also want to ensure you have the means to repay. Personal credit doesn’t always come into it with business loans and you have to understand that. If you’re looking for a lending solution, you have to know your credit rating and what type of loans and amounts you’ll able to borrow. If your business and personal credit is poor, loans for bad credit may be the only solution left. For more details read our article: http://www.search-sec.com/4-ways-to-quit-your-role-as-a-loan-guarantor/