Clean Up Your Personal Credit Before Starting a Business
- December 29, 2018
- Category: Business
Did you know that your personal credit can impact your ability to get funding and other things for your business? Though you may have done your due diligence and registered your company as an LLC or otherwise, creditors, property owners, and vendors will still look to your personal credit to make a decision on doing business with you. Since your company has not been established very long, they have no track record to review and will revert to your personal finances.
As you likely already know it takes a considerable amount of money in the beginning to launch a business. There are licensing and registration costs, insurance, and operational expenses that all need to be covered. Though you may have some savings to dedicate towards it, you’ll need a steady cash flow to keep you afloat until your company starts generating a profit. From getting a business loan or commercial property to ordering office supplies and inventory, your personal credit will matter immensely.
Cleaning Up the Act
Creditors, lenders, commercial property owners, and vendors view your credit history to determine if you’re worth doing business with. They need to know how risky it would be to give you a line of credit, a few thousand dollars, a property lease, or inventory. Are you good for repaying things in a timely fashion? Or, will they end up suffering a loss? It is imperative that your credit history reflects the former. Here are some ways to clean up your credit for an increased chance at access to cash, property, and other services.
- Get Rid of Debt – The more debt you have, the higher risk you are. To ease the fears of companies you wish to do business with it is imperative that you get rid of debt. You can knock out smaller bills first with the assistance of a quick cash loan (which don’t require credit checks). This way, you’re cleaning up your credit faster.
- Make Timely Payments – As you’re reducing your debt to income ratio you need to maintain your current accounts. Set up automatic bill pay or calendar reminders so that you can remember to pay your bills on time.
- Remove Inaccuracies – Lots of consumers aren’t even aware of what’s being reported on their financial history until they try to apply for something that requires a background check. Inaccuracies are seen all the time and can cause your credit to plummet. Get a free copy of all three credit reports and review them thoroughly. If there are negative accounts on there that don’t belong to you or have long been paid off you can dispute the findings and they can be removed.
- Keep Your Day Job – If you were thinking about quitting your job to start this business, now is not the best time. When lenders are deciding on whether or not they’re going to give you funding for your business they want to know that you have a stable means from which to pay them back. Keeping your regular job lets them know that even if things don’t go well with your business that you still have a way to repay their money.
Before embarking on the journey of an entrepreneur it is imperative to clean up your credit. Whether trying to obtain a lease for your retail shop or get a loan for startup costs, service providers will first look to your personal credit history to determine what type of risks are involved. To put their minds at ease and increase your chances of getting the things you need for your startup to succeed, have a look at your credit report and make changes such as those listed above to make a difference.
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