Growing a business is hard, and your credit score shouldn’t make it harder. If it’s bad, then it sure isn’t helping!
That’s why I’m gonna share EXACTLY what credit score you need to start a business.
In the 20 years since releasing my first credit repair software, I've helped thousands of businesses scale from the ground up.
I’ve seen a lot of people repair their own credit and go on to build a really successful business.
And I’ve been seeing a lot of questions recently from people who want to build their own business about what credit score they need to get started.
Although it’s a simple question, the answer is not so simple.
HERE'S HOW THIS RELATES TO US
The fact is, as unfair as it sounds, your personal credit score could play a big role in your ability to secure funding, partnerships, and contracts when starting to run your own business.
Lenders and investors often look at your personal credit score to gauge the risk of lending you money – even if it’s for your business.
So if you have a low credit score, you might not be able to get a loan or line of credit.
This can hurt your business's growth and hinder your ability to take advantage of opportunities as they arise.
Even certain vendors and suppliers who you may be considering partnering with may require a particular credit score, and potential clients may ask to see your credit score before deciding to work with you and your new business.
HERE'S THE THING TO REMEMBER
A low credit score could raise red flags and hurt your chances of landing that partnership. While a good credit score can show that your business is financially reliable, making it more likely for suppliers to want to work with you.
Now, some lenders may consider factors beyond just your credit score, such as your business idea, market potential, and your ability to execute your business plan.
Research different financing options and understand the requirements and terms associated with each, regardless of your credit score.
HERE'S WHY THIS IS IMPORTANT
A good credit score helps you achieve financial goals and gives you the peace of mind that comes with knowing you've got your money matters under control.
A lot of investors and vendors see your credit score as a sign of your character and financial responsibility. And a good credit score can help to build a reputation for reliability and trustworthiness. While a bad credit score can undermine your credibility and limit your chances to grow your business.
HERE'S WHAT YOU NEED TO KNOW
While specific credit score requirements for building a business can vary depending on several factors, including the type of business you're starting, the amount of funding you need, and the specific lenders or investors you're working with, having a higher credit score, say 700 and above, does increase your chances of getting approved for loans and can help demonstrate your creditworthiness to lenders.
So, what if your credit score is low? Does that mean you should give up on your dream of building a business? Absolutely not! Let’s look at few things you can do.
First of all, monitor and check your credit regularly. Start by confirming that all your personal information is up-to-date and accurate.
Note any suspicious items that don't belong to you. Any misspelled names or personal information that's out of date or incorrect. Or accidental duplicate accounts, which are common for people with student loans or accounts in collections, but they also could be a sign of identity theft and fraud. If you see any of these items, write the Credit Bureaus immediately and demand that they be removed.
Review the details of any negative items on your Credit Report, including Late Payments, Charge-Offs, Collections, and accounts listed as "Settled," "Paid Derogatory," or "Paid Charge-Off." Check them for errors.
Second, dispute negative items. 79% of Credit Reports contain errors. So look for inaccuracies, and dispute them immediately.
Let the credit bureau know you’ve received a copy of your credit report and that you found the following items to be errors. Make sure to list each item you’re disputing and exactly why. Include any supporting documentation you might have, along with your driver's license and a utility bill. Close the letter with this…
By the provisions of the Fair Credit Reporting Act, I demand that these items be investigated and removed from my report. It is my understanding that you will recheck these items with the creditor who has posted them. Please remove any information that the creditor cannot verify. I understand that under 15 USC section 1681, a, you must complete this investigation within 30 days of receipt of this letter.
If the credit bureau has not removed the item from your credit report, you’ll need to send a follow-up letter. Once again, list the items you’re disputing and why. You might need to dispute the same item several times. That’s ok. That’s how it goes. But be sure to pay attention to the responses you receive because, depending on them, you may need to follow up with different types of letters.
And finally, it’s always a good idea to do things to boost your credit score. The best way to do this is to pay down the balances that adversely affect your score.
You can also ask your creditors to raise your limit without performing a credit check. While some may decline that request, others may be willing to raise your limit, allowing you to improve your Credit Utilization ratio and boost your Credit Score.
By the way, NEVER EVER close old credit accounts. Closing an old credit card will make your report show less available credit which will damage your score! It also causes that account to stop aging, which can negatively affect your average account age and that will hurt your credit. And if the account you close is one of your oldest accounts, that damage can be even worse. So NEVER EVER close old accounts.
HERE'S MY FINAL POINT
The bottom line is that your credit score matters and can have a significant impact on you as an entrepreneur and on your business as a whole. So be sure to monitor, dispute your credit reports, and take the necessary steps to improve your score.
I'LL END BY SAYING...
If you still need a Credit Repair Cloud account, check it out. It's the software that most Credit Repair businesses in America run on. Sign up here for a Free Trial!
And if you'd like to improve your credit score and learn how to earn extra income repairing credit for others, check out our brand-new Start Repairing Credit Challenge! Doors are closing soon, and it’s completely FREE, so sign up right now at startrepairingcredit.com and keep changing lives!
So take care, Credit Hero!
And Keep Changing Lives!