Your credibility profile: Are you smart enough?

Today, smart is about your credit date. As an owner of a small business, you do not need to be a credit or financial expert, but in today’s world you need to pay attention to creating and maintaining a strong profile.

All SMEs in the US have two profiles, personal credit profile and credit profile, and business owners need to understand how they work together.

Personal credit
Your personal loan reflects how your personal loan obligation is fulfilled. While this is not the best indicator of how your business fulfills corporate credit obligations, corporate creditors see it as an important part of the overall business rating and business owners’ creditworthiness . The company.

Among over 30 million SMEs in the US, there are very small companies that directly reflect owners / founders. Therefore, the way homeowners get closer to personal loans is a consideration when applying for loans for SMEs. In short, the lender really wants answers to three basic questions:

Can you repay the loan? Does the company have sufficient revenue and cash flow to repay debt? For this reason, most lenders are asking about business income and cash flow. They are looking for business customers who can make regular payments.
Do you want to repay the loan? Since this is a slightly different question than the above question, your creditworthiness (including your personal loan) is very important. This is also why most lenders will consider your personal profile in evaluating your creditworthiness. This will give you insight as to what you do on a regular and timely payment based on your credit history, as you have done in the past.
Does your company pay the loan? That’s one of the reasons the lender wants to confirm that you have the resources to make those payments, regardless of what is happening in your business. Unlike investors, bankers and other lenders do not invest in your business. You provide capital to your business for regular and regular payments. If you can not afford these payments, your business and lenders will be lost.
It is becoming more important than ever to pay attention to personal credit profile due to recent personal credit report industry data breach. In my opinion, periodic monitoring of personal loans is equivalent to an unobtrusive fee charged by major personal credit bureaus (Experian, Equifax, Transunion). If there are changes or requests regarding credit profile, I will receive monthly reports and updates. In addition, for many years, I caught a couple of things and was able to solve the problem from the beginning before it became out of control.

In addition to a large office, there are other credit monitoring services. In the United States you have the right to receive a free credit report every year (I am personally a fan of frequent surveillance). For example, if you accept a hard copy sent to Canada by post, you can freely access your personal credit report.

Business credit
Your company’s credit profile reflects the credibility of your business. Unlike your personal credit, it is not expressed in a general way, but is usually represented by a series of reports on the speed with which the company repays to suppliers, presenting terms of payment and the whole of other companies A comparable degree of credibility with this sector) and the same revenue class, scale, number of employees, business in the region and other business.

Likewise, I think that it is useful to periodically monitor your personal letter of credit and review it. I believe that monitoring frequently is an important step in building a profile that does not guarantee microcredit, but certainly it will increase credit options for small businesses. It is human nature to improve or change the most important thing for him. The same applies to corporate credit profile.

Furthermore, it is important for business owners to separate the use of personal loans from the use of commercial loans and to prevent personal loans from being used as soon as possible for commercial purposes. If you use your personal loan for business purposes does not create a highly credible profile or because some commercial loan applications may actually impair your personal credit score, I will say this.

Please enjoy your credit day. Understanding the work of credit is not the reason why you became a small business owner, but there is no doubt in building a successful business.

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