Most Entrepreneurs don’t realize that their personal credit is crucial to their ability to successfully run a business. When you first start a business your personal credit is what is used to determine the types or if any credit will be extended to you. Your personal credit will also affect the rates at which credit is extended to your business.
Since you are just starting your business, it doesn’t have any credit built up, which is why your personal credit is used until you can build up credit for your business.
Some businesses are not considered separate from the owner so the credit is shared, those are sole proprietorships, general partnerships and limited partnerships. Even though you have a taxpayer ID number for your business, your personal credit and social security number are still used to determine your business creditworthiness.
Your best strategy is to talk to a few banks if you need a business loan and then decide where to apply based on many different factors including the interest rates offered and how much money you have saved up, if you have no or bad credit and how much you need to borrow.
A good way to help get a loan especially now with the economy in the state it is in and more lenders tightening their lending policies is to have a marketing plan, a business plan and a credit policy written when you go for the loan.
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