It might be hard to believe that failing to pay your bills or applying for personal credit too often can cause professional inconvenience.
After all, your personal accounts are separate from your business life, and your individual credit has nothing to do with your business competence.
However, the two can become frustratingly linked when you personally try to make any decisions on behalf of your business.
If you’re not yet convinced that making poor choices with your personal funds will matter in the future, the following information may change your mind.
Getting a Business Loan
Unless you read a tradeline supply company review, contact a tradeline company, and attempt to improve your credit score, you may find it challenging to secure a business loan.
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Many lending companies prefer to lend to people with a score of 700 or over, and while you may still be approved for lending under 700, it may be at a much higher interest rate than someone with better credit.
Business loans can be crucial for growing your business, purchasing inventory and equipment, and making upgrades. Don’t underestimate the importance of making sure your personal credit is in excellent shape before applying for a business loan.
Finding a Premises
Your personal credit history can cause problems when you’re trying to find somewhere to lease or rent in your personal and business life.
Commercial and residential property owners want desirable tenants who don’t pull out of their agreement early or default on their rent, which means they sometimes rely on your credit score to determine what type of payer you are.
If they see a low credit score with a history of even one defaulted payment, you may not be their ideal tenant. It may take you longer to secure adequate business premises.
Signing Up for Utilities
If you have managed to secure a business loan and are now in the process of finalizing business premises, you will likely begin hunting for utility companies to provide you with electricity, water, and other necessities.
Like many companies providing a service in exchange for payment on a contract, they will often delve into your credit history to find out how likely you are to pay your bills.
While you may not be turned down for service, some utility companies request an extra deposit and impose other restrictions on your account to protect themselves.
Finding Distributors and Suppliers
Just as you expect your customers to pay you for the products and services you provide, so do your distributors and suppliers.
When you sign a contract with a new supplier, they typically want reassurance that you’re trustworthy, and they usually get that reassurance by running a credit check.
If you’re the person they’re checking, and your credit history is less than desirable, you may not be afforded the same privileges as other customers, such as a credit line or extended payment windows.
Some suppliers who have been burnt by non-payers in the past may even decline to take you on as a customer at all.
Paying More Than Others
When your credit history is less than satisfactory, you’re not viewed as trustworthy by many businesses and organizations.
While they likely still want to lend you money, sell your products, or sign you up for their services, you may find that you pay more for the privilege than other people with better credit.
An example of this is in insurance. In many states across the United States, excluding Hawaii, Maryland, California, and Massachusetts, you may be charged more for homeowners and automobile insurance if your credit score is low.
Essentially, the lowest possible insurance rates can be out of reach if your chosen insurance company factors your money habits into their risk assessment of you.
Even though your business is separate from your personal life, your personal financial situation can undoubtedly cause some frustrations in your professional life if you’re the one handling your business’s financial affairs.
Before applying for loans and launching your new business, consider making sure your personal credit score is as healthy as it can be to avoid as many frustrations and setbacks as possible.
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