How Your Personal Credit Affects Your Business

By | June 13, 2017

How Your Personal Credit Affects Your Business

Are you one of those people who assumes that personal credit has nothing to do with business? Do you find it difficult to keep your business and personal accounts separate? If yes, you could find yourself in a spot of bother.

Whether you know it or not, your personal credit could be secretly killing your business. Don’t believe us? Here are four ways your personal credit is murdering your business:

Goodbye, Loan Approvals

Business is full of ups and downs. You can never predict what the future of your company is going to look like. No matter how well you handle things, there are chances that you’ll fail. Even if you don’t, the market could start acting up. Whatever the reason, your business could plummet into financial hell.

During such a trying time, opting for a loan may be the first solution on your mind. But, if you’ve already ruined your Credit Score, you’ve also ruined the chances of getting a loan approval. A lot of debt, a lot of pending Credit Card payments and a couple of such factors can negatively affect your Credit Score.

And it doesn’t just stop at loan applications. With a poor Credit Score, you might not be able to apply for a Credit Card as well. Unless you want to face Credit Card or loan rejections, you need to work hard on that Credit Score. Don’t let unnecessary debt pile up.

Additional Reading: How Well Do You Know Your Credit Score?

Goodbye, Office Space

Are you looking for an office space for your business? If you have a poor Credit Score, the chances of people letting you rent out their property drops significantly. That definitely isn’t good news, especially if you’re planning to expand and grow your business.

As the size of your company grows, you need more space and resources to keep it functioning. If you don’t have a big enough workplace, it might lead to a lot of chaos and confusion. You certainly wouldn’t want to see all your hard work go down the drain. This should be as good a reason as any to keep a constant check on your personal credit.

Additional Reading: 8 Steps To Start Your Own Business

Goodbye, Peace Of Mind

No matter what the nature of your job is, the ultimate goal is to secure your life financially. However, with too much credit hanging over your head, achieving your goal could be easier said than done.

No matter how many hours you spend staring at that computer screen, if you’re constantly worried about paying off excessive debt, you can never be productive. This even affects your decision making and your peace of mind.

Since you are solely responsible for the progress of your business, you need to stay sharp and focused at all times. One wrong move and you could lose everything. This is exactly why staying debt-free should be at the top of your list of priorities.

Additional Reading: Manage Debt Wisely!

Are you thinking what we are thinking? How could you possibly be hurting your own business credit? Hang on! We’re getting there.

Business Credit? Who Checks That?

One of the most crucial parts of handling a business is keeping clear credit records. If you mess that up, a lot of things could go wrong. While incorrect credit entries or poor tracking of cash inflow and outflow may seem fairly insignificant, they are more than capable of ruining your business credit and ultimately your company.

You, therefore, need to ensure that you maintain your business’ records. You need to know everything in detail regardless of how big or small, and you must make sure you have proof of all transactions that take place. While this may be a little time consuming, it is certainly worth the effort.

Additional Reading: Is Your Financial Life On Track?

Time Limits? Who Follows Them Anyway?

Late payments affect your Credit Score and eventually your business. If you don’t have a habit of paying your EMIs or bill on time, then you can be sure it will affect your business eventually.

Once your Credit Score drops, your loan applications are likely to face rejection. You might be in a dire need of a business loan, but due to your careless attitude, you might not be able to get a loan approval.

We know there are other ways of getting more cash for your business, like borrowing from your friends and family or breaking that Fixed Deposit you’ve saved for so long. But, do you really want to do that? Do you really want to borrow money from your acquaintances and put your relationships at risk?

What if you’re unable to pay them back on time? There are better ways to fund your dreams. A small business loan is the way to go, but in order to get one, you need to be more time-conscious. Paying all your bills on time and not missing any EMI payments are extremely crucial, especially when it comes to running your business.

Additional Reading: EMI Payments Explained

Who Needs Business Credit? I Have Personal Credit!

Many people find it extremely difficult to keep their personal and business accounts separate. If you’re one of them, you have reasons to worry. If you’ve just started out, your expenses are likely to be higher than that of a well-established business. There are chances that you’ll just use your personal Credit Cards to fund your business expenses.

This isn’t a particularly smart move. You’re basically increasing the chances of maxing out your personal Credit Card. If you keep doing that frequently, it could just destroy your personal Credit Score.

Eventually, your business will have to face the music as your company credit will be in bad shape. To build good company credit, you need to take steps to actually build it from scratch. For that, you need to do things like applying for a business Credit Card and gradually build a positive credit.

The thing that you need to keep in mind is that you need to apply for a card that suits your needs. If you keep crossing your credit limit, and maxing out your Credit Card, it will eventually affect your company credit.

Additional Reading: Tips To Deal With Credit Card Debt

Monitoring Credit? Who Does That?

If the term ‘credit monitoring’ sounds alien to you, there might be a reason to worry. To ensure that your business reaches the heights you’ve always wanted it to achieve, you must always be aware of all credit and debit transactions that take place.

If you’re clueless about your current business credit, you’ll never be able to maintain it. By the way, all your vendors and lenders keep a constant check on your business credit. That’s certainly a good enough reason for you to start doing it yourself.

There are many tools out there that help you monitor your business credit on a real-time basis. They also send you alerts and notifications in case anything changes. How cool is that?

In case you get a notification for a sudden change in your Credit Score, you can easily identify the threat and take preventive measures to avoid damage.

Additional Reading: Check Your Experian Credit Score For Free At

So, now you know how your personal credit has the power to affect your business. What are you waiting for? Get a business Credit Card and start building your credit.

All information including news articles and blogs published on this website are strictly for general information purpose only. BankBazaar does not provide any warranty about the authenticity and accuracy of such information. BankBazaar will not be held responsible for any loss and/or damage that arises or is incurred by use of such information. Rates and offers as may be applicable at the time of applying for a product may vary from that mentioned above. Please visit for the latest rates/offers.
Category: Business Loans Credit Score

About BankBazaar

BankBazaar is the world's first neutral online marketplace for instant customised rate quotes on Loans, Credit Cards, Insurance and Investment products. Shop for financial products just like you buy everything else now - online.

Leave a Reply

Your email address will not be published. Required fields are marked *