Why your personal credit score is holding back your business, and what to do about it

If you want your business to succeed, you’ve got to be able to seize all the opportunities that come your way. This is especially important when it comes to growing your business, but when it comes to funding, I see lots of people who are being held back by their personal credit scores. It is so vitally important to get this right:

You cannot afford to let your personal credit hold you back in business!

If you think that your personal credit has nothing to do with your business, you’re very wrong. Yes, there’s loads of ways to find business finance, but what happens if these aren’t an option for you?

There are lots of reasons why the more traditional business loans might not work for you when it comes to funding your business – maybe you’ve not got enough of a history for the major lenders to back you, or maybe your turnover or margins are too low to make repayment terms work.

In these cases, your personal credit can be the difference between making it happen or not. 

You don’t just have to consider ‘business finance’ options when looking for funding. If you’re serious about making your business a success, you have to be prepared to look at any and all routes to getting there! If that means leveraging your personal credit in order to do it, then your credit history HAS to be in order.

Personal loans can often work out to be cheaper than getting a specific business loan. But without a good credit score it’s just not going to happen.

No excuses

It’s no good saying you don’t want your personal credit mixed up in your business. Yes, there’s a risk if things go wrong, but even if you take out a business loan as opposed to a personal loan, it is next to impossible in today’s market to find an SME lender who will not demand personal guarantees from the owners or directors. If you aren’t prepared to take the risk then why should a lender?!

If you don’t believe you can make a success of your business, you shouldn’t even be thinking about borrowing money to fund it! You have to 100% COMMIT to it. If that looks like taking out a credit card to give you access to the funds you need, then if you’re not even backing yourself enough to make that happen, it’s going to ring alarm bells for any other funders too.  

What can you do?

The most important thing you can do is to make sure you know exactly what the score is (no pun intended!). If you’ve never even thought about checking your personal credit score – now’s the time to start. There’s plenty of websites you can use to check on your credit score, and what it’s saying about you. I personally use www.creditexpert.co.uk. It has a nominal monthly fee and is worth every penny. (No, they aren’t paying me a commission for this!!)

There might be incorrect information on file that’s holding you back from getting credit. Credit Expert can help you identify this and show you other things that you can do to improve your credit rating, which should mean you have a much wider range of options open to you when you do need finance. This type of service is the best place to start if you’re even remotely thinking about funding.

You need to take control of your situation and have a clear understanding of what your credit profile looks like so that you don’t waste your time making credit applications that are bound to be declined. Having loads of different searches on your record worsens your credit score and hampers your chances of being approved for a loan, so don’t unnecessarily put yourself in that situation.

Even if you aren’t actually looking for a business loan right now, getting your personal finances in order is important to your business success. Many investors and other interested parties will often want to understand the personal credit situations of the business owners or directors they are involved with – if you run a shabby ship at home the chances are those problems and mentality will filter in to your business too. Get it right NOW, before it’s too late!

If you’re interested in finding out more about what it takes to get your business funded, download my step by step guide – the Get Funded Guide. It’s got first-hand advice, tips and tricks on how to give yourself the very best chance of success. Once you’ve worked through it and are ready to grow your business – get in touch! 

Matt Haycox

 

www.matt-haycox.com

http://www.fundingguru.com

matt@fundingguru.com

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