Many people dream of one day opening their own business, but not all of them know that the financial plans they make today may impact the investment advice they get in the future. Opening a privately-run company takes a lot of upfront capital, and to meet the needs of a growing organization some will turn to credit cards and commercial loans to offset the expense. However, to get these monetary devices, banks will not be able to review a business' credit history – they will have to rely on a personal score.
Planning for business
Having a good personal credit score is always a good first start. Since this is one of the deciding factors in many initial financial negotiations, it is important for potential business owners to consider this every time they invest in a new strategy, get a mortgage or some other kind of loan. All of these choices will have some impact on later credit applications for a business startup.
The San Francisco Chronicle wrote in a recent release that private persons considering their own companies in the future should be aware that a credit score over 700 can provide the best terms when negotiating commercial loans, and while those in lower standings will still be considered and offered terms for lending, they will not be as good as they could have secured.
Being careful with investing is just one good financial tip for those considering a business later on down the road. Apart from being healthy from a personal finance point of view, Terry Robinson of Sunovis Financial also recommended reviewing a full history to ensure things are in order. This is important, he noted, as finding things that don't match or are out of place could mean an adjustment are properly arranged, or that identity theft has taken place. Getting regular reports on credit activity and reviewing them with a financial advisor can protect against discrepancies and fraud.
"In addition to having a high credit score, business owners should examine their credit report for any abnormalities," Robinson stated. "Preparation is critical when applying for a small business loan."