The Role of Personal Credit Scores for Business Funding

One of the benefits to building a strong Business Credit Asset™ is lenders, creditors, and suppliers will determine the level of credit risk based on the company’s creditworthiness rather than that of the owners.

However, there are instances where a lender will require a personal credit check as part of their overall risk assessment. In these cases it would be in your best interest that you have a positive credit rating with the consumer credit agencies.

If your credit scores currently fall below 680 then you will need to focus on taking some positive steps to improving those numbers. When you have favorable credit scores you have a much greater selection of funding options to choose from. Even if you allow a lender to check your credit rating, once approved, they may only report your debt and payment history to your company’s credit files not your own. Now if you decide to apply for business credit with a lender requiring a personal credit check, you should know what your scores are beforehand.

FICO is the most widely used credit scoring system in the world. The majority of lenders will use this system to obtain your scores so they can determine your credit risk as an individual. Each score is based on the information that each consumer credit agency keeps on record about you. First, visit MyFico.com and determine what your Transunion and Equifax credit scores are. The cost is $19.95 per score and it provides you with a detailed explanation on the positive and negative factors affecting your scores.

Secondly, you will need to order your credit score from Experian at their main web site. Currently they are offering a $1 credit report and credit score which also includes a breakdown of factors that raise and lower your scores. Once you receive your scores and reports, look for any errors, inaccuracies, or outdated information. If you uncover any questionable items with any of your reports then initiate a dispute immediately with the agency containing the errors.

For Equifax – Go to Equifax.com and click on the “Dispute Errors on My Report” text link. You can initiate a dispute online but you will need to supply a confirmation number which can be found on your Equifax credit report. For Transunion - Go to Transunion.com and click on the “Credit Disputes, Alerts & Freezes” tab. You will need to create an account first but once you login you will be able to initiate a dispute, check your dispute status, and trigger a credit freeze if you need to. For Experian – Go to Experian.com and click on the “Disputes” text link located at the bottom of the page. You will need a report number which can be found on your Experian credit report.

On this site you can start a new dispute, check the status of an existing dispute, and view results of a completed dispute all online. It is vital to monitor your personal credit and ensure that all the information being reported is accurate and up to date. Just one mistake can impact your scores and cost you hundreds if not thousands of dollars in additional payments and interest that you should not be paying.