Being an entrepreneur is never easy, having to juggle a million things at once.  One of the most crucial aspects is not only the ability to obtain capital to start the business but having continued access to capital as you run your operations. But did you know that personal credit rating can affect your business?  Read on.


There are several ways to get the much-needed funding.  For the initial capital injection, funding sources could be in the form of a bank loan, government grant, venture capital, angels and of course your own savings.  Once the business is up and running, other funding sources will then become an option, such as invoice financing, purchase order financing, private equity, and bank overdrafts.


However, did you know that all such funding sources will take your personal credit rating into consideration as part of the overall credit assessment?  Without a good personal credit rating, it will be much more difficult to obtain the funding you seek, or you may have to pay over the odds for it. 


What effects your personal credit rating?


How many credit lines do you have?

The more credit lines you have active and owing, the higher the risk associated to you.


On time payment

Pay your creditors on time.  This includes all your personal debt such as your credit cards, mortgage or car loan.


Avoid applying for multiple credit facilities in a short space of time

Every time you make an application for a credit facility, the financier will usually make an enquiry to access your personal credit report.  The number of such enquiries are recorded and will be visible to all lenders.  A high number of enquiries may be interpreted negatively as you may be in a troubled situation and need cash fast. 



If you are a bankrupt or have been a bankrupt, this will indicate poorly to lenders.  Once discharged from bankruptcy, this information will be retained in your credit report for 5 years from the date of discharge.


Not all lenders assess your funding application in the same way.  However, it is best to understand the possible affect that your personal credit may have on your application.


Read more on our previous articles on how to improve your business credit worthiness here.

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