Why Personal Credit is Important when Starting a Business
A lot of people might diminish the importance of having good personal credit when starting a business, but this could result in many roadblocks. Many businesses end up never lifting off the ground for this very reason, and you might not be able to access financing and certain services. However, once you understand the role personal credit plays in the wellbeing of your business, you can start taking steps to improve it, while building your business’s credit. Here’s why having good personal credit is crucial, and what you can do to correct the situation.
Your Credit Score Says More about You than You Think
Your credit score is much more than just a report on your credit situation. It’s also shows a glimpse into your personality. It really shows how much you can be trusted with money, which is very important when you’re in business.
This means that it could not only affect your financing options, but could also affect your relationships and options with suppliers, commercial real estate, equipment purchases, and access to utilities for instance. And while your business credit will have an effect on loan application, your personal credit could be the final determinant.
Can Bad Credit Be Fixed?
Yes, it can, but it can take time. First, you have to make sure that you actually know what your credit looks like. You might think that things are worse than they are when some accounts may have been past the statute of limitations. You also have to look for errors and contest them if needed.
If your situation is complicated, or you have many items to dispute, we suggest you consider working with a credit repair company. A credit repair company like GoClean Credit will be able to assess your situation and fight to have anything on your record that is invalid removed. They’ll also be able to help you work with your current creditors and work on a deal for items to be deleted. They’ll also teach you the exact steps necessary if you want to know how to repair credit.
How to Work Around the Situation
Even if you have bad credit, you shouldn’t give up, however. This is the perfect opportunity to start building business credit while your consumer credit situation is being corrected.
The first thing you should do is form an LLC or incorporate your business. This will allow you to create a separate entity. You then want to generate some activity for it. This can be done by establishing trade lines. Trade lines are accounts that can show activity, and show credit worthiness. This can be anything from a utility bills or a secured credit card. All you have to do is make sure that these are taken care of and always positive.
Poor personal credit could block you from opportunities, but it can always be addressed. Make sure that you work on establishing good personal credit first and foremost and start on a good foundation.