How Your Personal Credit Score Affects Your Ability To Get A Loan

Many people are unaware that their personal credit score does matter when applying to get a business loan. A personal credit score is a numerical indicator of your personal financial payment and loan activity and is supposed to be a directional indicator of how you will pay your bills and manage your credit in the future.



Up until the past few years, personal credit scores drove the business credit card market because of cost and convenience. Since your personal credit score is based on your past credit history, it can help to determine how well you will repay a loan in the future. Also, a credit score is much easier to look at than to fully understand a business which can be very time-consuming and costly.



Your personal credit file is made up of several components including your actual monthly payment history including credit card amounts, medical bills, utilities, and loan repayments. Your credit file also consists of the actual dollar amount that is owed, factors such as what type of credit, and also the number of inquiries. The information is kept for a number of years and typically goes back 5 to 10 years.



A business loan isn't the only option out there for a business owner looking to get funding for their company. Another option is getting a business or a merchant cash advance. Most of the business cash advance and merchant cash advance providers do pull your personal credit score although your score is not relied on as much in terms of approving credit.



When applying for a small business loan, most have a minimum score cut off of 700 as opposed to a business or merchant cash advance that will often approve those with scores anywhere as low as mid 500's. Most providers are looking at what is going on in your credit file such as are you managing to get things paid or how much personal debt you owe. They are much more focused on cash flow and the ability to cover the payment rather than just the traditional credit scores.



There are a number of ways to become better informed about your personal credit score. There are many online sites such as FreeCreditReport.com or MyFICO.com although you need to make sure you know exactly what you sign up for because many of these sites offer a free base level but actually charge a fee for their monthly reporting services. You are also entitled to get one free credit report from the main credit bureaus each year. These credit bureaus include TransUnion, Experian, and Equifax.



If you are a business owner and thinking about getting funding for your business it would be a good idea to check out your personal credit score so that you know where your score falls. If you are not at the 700 range you might not even want to waste your time, typically several months, that it takes to go through the process of applying for a business loan. You might want to look at some of the other alternative options like a business or merchant cash advance.





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Ed Harycki, founder and CEO of SwiftCapital, reveals tips and advice for small business owners looking to get a Business Loan. To discover exactly how to get the funding your business needs - and how much funding your business qualifies for in today's lending environment, visit http://www.SwiftCapital.com to use their free "business funding qualification" tool.





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