6 Major Ways That Bad Credit Can Impact Your Business
Americans have had a lot of ups and downs with money over the past few years. As a result, many people have worried more about making ends meet than how their credit score looks.
But if you are thinking about starting a business, you should know that there are many ways that your poor personal credit score could affect that goal.
Taking out a loan
One of the first things many entrepreneurs do is take out a business loan to cover their start-up costs. But did you know that it is a real possibility that the bank will check your credit profile when considering those loans? If your credit is weak, the bank may not want to take a risk by loaning you money.
Many places offer business loans for bad credit that may be able to help you. Be sure to look into all of your loan options.
Finding a physical location
Many new businesses that open today are online. But if you are opening an office or a store, you will need a physical place to do business.
Most real estate offices will hesitate to start a relationship with someone with a poor credit score. They will immediately see the risks of money lost if you break your lease early or you cannot pay the rent if business is bad.
Getting utilities and inventory
If you have an office, you will need lights and water. Your credit history could affect your relationship with the offices that provide those services. Many of them will still do business with you since they provide something deemed a necessity.
However, you should not be surprised if the power or water company asks you for a large deposit upfront before they will turn anything on.
Rest assured, you will be able to get insurance for your new business. But your monthly cost is going to be much higher. You will probably have to pay a sizable down payment as well.
You need vendors to provide you with the goods you need. Unfortunately, if your credit is terrible, many vendors will not want to do business with you for fear that you will not pay them at the end of the month.
You may not be able to launch
The fact is that any one of these can be a wall toward getting your business off the ground. If you cannot get a loan, you cannot afford your insurance, or the vendors will not sign contracts with you, it will be challenging for you to launch your business.
If starting your own business is something you want to do, you should look at your credit score. If it is low, it would be good to do some work to improve it before you start applying for loans and vendor contracts.
The higher your credit score is, the less trouble you will encounter. And the good news is that you can start improving it quickly.