Poor credit, overdue payments, over-extended borrowing, bankruptcy and more are a business owner’s worst nightmare. Did you know, of the sixty-three-plus percent of startup/small businesses that try to secure credit barley twenty-seven percent succeed. Even businesses that have exemplary credit are struggling to secure loans and financing. What do business owners in this position do? Alternative financing is an option.
Is personal credit the same as business credit??
Getting startup business loans can be challenging. The scores are very different with personal scores ranging from three hundred to eight hundred and fifty. Scores for business are a little lower, ranging from zero to one hundred. In either case, credit scores are calculated using an algorithm. There is one subtle difference however: business scores do not confirm to any defined standardization. What’s more, business loans comprise two key components 1) a credit score 2) a summary. Additional consideration is also given to things like bankruptcy filings, payment collections, related judgement and tax filings.
You have a right to a free credit report from the main credit-tracking companies (Equifax for example) as it relates to your personal finances. However, business credit scores must be paid for regardless. More to the point, business credit scores are in the public domain.
Of course, personal and business credit scores are separate. Don’t fall into the trap of thinking that both are not considered when applying for credit… because they are. So it’s important that if you have both forms… to take care of them.
It is important to keep up with payments as untimely payments may result in a default. In any case, falling behind on payments will place unwanted strain on your finances and can be hard to recover from–avoid this scenario at all costs.
If you’re thinking of starting a business outside of the US, consider that credit laws enforced by other countries can and may be very different. In the UK, for example, there are sever credit rating methods, which can make things very confusing and complex. Scoring varies from lender to lender AND the means are kept completely secret!
In the US however, a rejection from one lender will not necessary mean rejection by other. In contrast, in the UK, rejection can have repercussions that impact on future applications for a given time period.
Don’t fret as we’re here to help. Should you need advice, guidance, and/or finances, please feel free to get in touch using the details on our contact page. One of our trained team members will be happy to talk to you and guide you through any financial issues you may have.