Starting up a small business comes with lots of obstacles. You will need to deal with the big-name competition. You will have to handle expensive overhead costs. You will probably have to deal with some upset customers that will put your staff’s service skills to the test. But, one of the biggest obstacles that a small business can deal with is bad dispute credit report errors.
A bad business credit score affects an owner’s ability to get funding from lenders and investors. The score labels your company as a high financial risk. If you can’t get any substantial loans, you may have trouble accessing the funds you need to stay afloat.
How to Fix Bad Credit
The good news is that you can repair your business credit score by paying all of your bills on time and carefully managing your cash flow. Whatever you do, don’t ignore your credit accounts. Slowly, but surely, you can pay off any lingering credit debt and move that score to a higher number.
What to Do If the Credit Debt Is Too Much
You’re in over your head and you’re not sure how you’re ever going to get into a stable position. At this point, you should see a licensed insolvency trustee to discuss consumer credit proposal or bankruptcy options. Click here to learn more today about the difference between a filing a consumer proposal and filing for bankruptcy.
Once a trustee helps you figure out what direction works best for your situation, they will guide you through the respective application process and credit counselling.
Personal Credit Score vs. Business Credit Score
Personal credit scores calculate your credit history as an individual consumer. Credit bureaus tend to set the scores between 300 and 900, with 900 being the best and 300 being the worst. On the other hand, business credit scores only calculate your business’s credit history and give you a rating between 1 and 100, with 100 being the best and 1 being the worst.
Bad Personal Credit Side-Effects
Consumer credit is technically separate from business accounts, but that doesn’t mean a bad personal credit rating won’t affect your business whatsoever. A poor personal credit score can make it extremely difficult to start a new venture, especially when it comes to getting funding from a bank. Bankers consider low credit scores to be indicative of lending risks. You will have your business loan application rejected, or you will be offered a small fraction of the loan request.
Your personal credit score can also affect your ability to apply for a business credit card. If you can’t get a bank loan or a business credit card, you’re going to struggle to build reliable business credit. It’s clear that personal credit is not so separate from business credit, after all.
A good business credit score can open up avenues for funding, support and expansion. It’s the ultimate way to get a seal of approval from banks and other investors. And a bad score is going to set up roadblocks for all of these amazing opportunities. Business owners need to be cautious about what number appears on their report.