Whether you are launching a side hustle, a startup, or a small business, you need to remember that your individual personal finances are just as important as your business. Undeniably, starting a business requires a certain level of capital, perseverance, and sacrifice.
Small business owners are notorious for doing whatever it takes to keep their business afloat. This grit is what makes them unique; however, sometimes it puts them between a rock and a hard place when it comes to their personal credit score. Here are four reasons why business owners need to care about their individual credit score and how to build their credit responsibly.
1. Business Lenders Care
As you can imagine, financial institutions and business lenders care about your personal credit score. They are not going to lend money to a small business owner who routinely defaults or misses payments. They need to ensure you are a ‘safe bet’ and truly creditworthy. Makes sense, right?
Additionally, most sole proprietors and small business owners fail to separate their personal and business finances from the start. This intertwinement of finances is what puts most small businesses at risk. And if your company has not established business credit history, then you may be forced to get a personal loan to finance your business which is more common than you may think. Especially if the business owner has an excellent individual credit score. They will receive a personal loan with affordable rates vice a small business loan that is accompanied by a high-interest rate.