Your Personal Credit Score Can Impact Your Business
It is common that businessman
use both types of credit, business and personal credit. Most of the companies
do their business on credit it is common because it is easy to process payments
due to involvement of financial institutions as banks which may take a longer
procedure of process for safe legal transaction. It is a common tool in present
business and it smart use can take a business to new heights. But here is
something to learn that how to use a credit productively which would provide
profitable results and it is a little tough be become a master in credit
management. Personal credit is helps a lot in taking approval business credits
and here we have some examples that how your personal and business credit
impact on each others.
If you own sole proprietorship
which is not registered as separate legal entity, and where business credit are
your personal credit. In such case your business operates with your own name,
so lender will looks your personal finance and business finance together even
you track them separately. For such business when you apply for business loans
they will be under your liability as your personal credit and late or missed
payment under your name can cause bad impression.
Your personal credit also has
an impact on your LLC type business but not much stronger as on sole
proprietorship. Results of LLC business reported on employer’s personal tax
return but LLC can have its own Tax ID. Lender companies will ask you for
income statement of tax return for new loan application.
When you apply for a loan with
you corporation type business your personal profile will not be ignored. You
can pay for a rating for your business like Dunn & Bradstreet, Standard
& Poor’s or Moody’s credit rating but these are reserved for larger
companies.
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