When you start a business and haven’t built up business credit yet, you might wonder if your personal credit affects your business credit score. While it does play a role in the process, bad credit doesn’t mean you won’t get a loan. 

How Credit Scores Work

Credit scores are a way for lenders to know how reliable you are in paying back what you owe. From houses to cars to retail stores, many things require credit. Your credit score is your financial grade. When you are approved, your credit score then follows your payment history and adjusts your score accordingly. 

Why Credit is Important

No matter the type of loan you are applying for, if your credit score is less than 660, you’re going to have a hard time getting approved with a traditional financial institution. Once your score reaches 720, you’ll have an easier time. Lower scores show that you have trouble handling your money, making lenders nervous about lending to you. 

How Personal Credit Factors In

More than your credit score plays a part. The financial report that comes with your credit score tells the whole story. If you have a felony, unpaid taxes, or a recent bankruptcy, you won’t be approved for financing. Any history of financial fraud will also be a significant issue. 

Different Lenders Look at Different Things

Traditional lenders look at your credit score and want it to be perfect. It doesn’t always affect the approval, but it can affect how much they are willing to lend you. Alternative lending options work for people without business credit whose personal credit is less than ideal. They won’t look at your debt-ratio, tax returns, profit and loss statements, or balance sheets. Alternative lenders are more interested in your cash flow.

From ACH business funding to cash advance programs to revenue-based loans, there are many options. If you’re worried about how your personal credit will affect your business credit score, an alternative lender might be the best option for you.

For all your business credit needs, contact Emerald Valley Financial Services today.