02/26/14

What Does Your Credit Score Say About You?

There’s no question, small business lenders look at your credit score and make assumptions about you and your business. A good credit score could make securing a small business loan a lot easier, while a bad score will likely make it more difficult.

A good attorney doesn’t ask a question he or she doesn’t already know the answer to. It just doesn’t make sense to visit the local bank or even look online for a loan if you don’t know your credit score. And, for most Main Street business owners, that means your business credit score and your personal credit score—yes, you have two scores and you should know both of them. In fact, on Main Street, where businesses are typically smaller, your personal credit score is just as important (sometimes even more important) than your business score.

If you don’t know your score, it’s easier than ever to find out what it is. The three major credit reporting bureaus, Experian, Equifax, and TransUnion all offer an inexpensive peek into what lenders are seeing. In addition to your score, you’ll also have visibility into what any of your creditors have reported to the bureaus about you and your credit history.

Although the three reporting bureaus look at scoring a little differently, and every lender has a credit threshold they won’t go below, here is a good starting place to see how a lender might evaluate your score when they’re making decisions about you, your creditworthiness, and a small business loan:

Of course the above is only a guide, but should give you a really good idea of what to expect when you consider your credit score and what you’re looking for. Of course there are circumstances when a good borrower might have a less-than-perfect credit score. The Great Recession did everything it could to bring small business owners to their knees. With that in mind, there are other things (like a business plan, etc) they will take into consideration.

Most lenders want to know that you are able and willing to repay a loan. One lender once told me, “Credit score is really just a reflection of a borrower’s willingness to meet their financial obligations.” Although that might be an over simplification in some circumstances, I think it’s safe to say that’s how most lenders look at it.

Do you know your credit score?

Learn more about your business credit score HERE.

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About the author

Ty Kiisel
Small business evangelist and veteran of over 30 years in the trenches of Main Street business, Ty makes small business financing and trends accessible in common sense language devoid of the jargon.

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