Starting a new business isn’t easy. A person must determine which type of business they wish to own, find a location, apply for funding, and more. Each step in the process moves the entrepreneur closer to achieving this goal. However, when funding issues arise, the process may come to a halt. How can a person prevent this from happening? For help with this, a person may try this site.
The entrepreneur’s credit score plays a role in whether they obtain small business loans or other means of funding the new venture. For this reason, a person must know their credit score before moving forward and research all funding options open to them. Visit the site before taking out a loan to start a small business, as the blog contains a wealth of information beneficial to any entrepreneur.
Business Credit Score
A person may or may not know their personal credit score. However, one needs to know the business credit score when requesting funds.
Open a business account as soon as the decision is made to start a new business. Doing so allows the business to begin building a credit history and business credit score.
A business credit score differs from a personal credit score. Dun & Bradstreet offers a PAYDEX score which provides information about the company’s payment history. Experian and Equifax, in contrast, treat a business credit score much as they do a personal credit score. The credit reporting agencies consider several factors, including collection agency data and public records.
The three reporting agencies assign a three-digit score to the business. However, they use different scales to come to this number. The easiest way to improve and keep a good business credit score is to pay bills on time.
The Personal Credit Score
Lenders such asL3 Funding look at a borrower’s personal credit score when determining whether to provide funds to the business. Personal creditworthiness remains of importance, as it provides information about the owner and how they handle finances overall.
According to realtimecampaign.com, a person needs to pay their bills on time to maintain a healthy personal credit score. The VantageScore and FICO score both take payment history into account. However, they take several other factors into consideration when assigning a credit score to an individual. This includes the person’s available credit, the total amount owed, how long they have held credit, and more.
Raising a Credit Score
Credit scores change over time. Whether a person wishes to improve one’s personal credit score or the business credit score, certain steps help achieve this goal. Lower the outstanding balance and watch the score rise. People need to make more than the minimum payment to bring the score up faster.
Understand credit utilization. Take the amount one owes on revolving credit and divide this number by the total overall credit. Multiply the answer by 100 to determine the credit utilization. To improve the score, try to keep this number under ten percent.
Credit score plays a key role in personal and business loans. One can monitor a credit score regularly to ensure it remains high. If it drops for any reason, take quick action. Doing so ensures access to funds when one needs them most for business or personal needs.