Starting a business entails a lot of endeavour, time and passion, requiring one to draw out a business plan, prepare various documents and recruit people, requiring sufficient finance. Most of them normally finance their initial business needs from their savings and make use of personal assets like their home as collateral.
However, with the growth of the business, there arises the need to get have additional funds. So, it is prudent to have a business credit score as an urgent requirement so as to limit the personal aspect of exposure.
If you intend to start your business, then how much credit would be required to start such a business? Few things have to be borne in mind about the credit score to start your business.
- Normally, business credit scores are in the range of 300-900.
- A score => 700 is considered a good score indicating the faith lenders have in lending you money and on your repayment capacity. Aim to achieve this score to land the best deals on loans.
- A credit score between 500 and 700 can also give access to loans provided you can assure the lenders of your repayment capacity. You may also have to provide collateral. Note that even though you will be able to get a loan the interest rates won’t be the best.
- A credit score between 300-500 is considered average, making it difficult to secure a loan.
- A credit score below 300 is poor and getting a loan is very difficult from traditional financial institutions.
Additional Reading: 6 Tips To Improve & Maintain Your Business Credit Score
Personal Credit Scores
- Your personal credit score also matters to banks and lenders while providing your business loans.
- It helps if you have a good personal credit score while starting a new business.
- Personal credit scores range from 300 to 900 and you can check your personal credit score for free at CreditMantri with just a few clicks.
Managing both personal and business credit scores is thus very important for entrepreneurs.
Points to Consider:
A bad credit score can hamper your chances of getting a loan
Managing personal credit score is very important for new start-ups