Your credit score determines your worth. Sounds harsh, doesn’t it? Of course, a credit score has nothing to do with your quality as a human being. However, as far as financial lenders are concerned, it has everything to do with how trustworthy you are with money. The higher your credit score, the more trustworthy you are. Without a strong score, you will have a hard time securing major purchases such as a home or a car.
You’ll have a hard time securing a business loan.
As a business owner, a low credit score will also seriously impede your chances of getting approved for a business loan. A bank’s loan officer needs to see that you have the ability to pay back the loan you receive. A poor credit rating suggests that repayment will pose problem for you. As Brian Martucci informs on MoneyCrashers.com, your credit score directly affects your likelihood of securing approval for a new loan or credit application.
“The lower your score, the less likely you are to find a willing lender,” he writes, “Even If you’re close to your lender’s prime-subprime or quality level cutoffs, many lenders simply don’t make loans to subprime borrowers or those who fall below a particular quality level. Although this can feel like the lender is being capricious, many borrowers can be affected by this in real ways.”
If you’re lucky enough to secure a business loan, you’ll likely have a high interest rate.
We don’t really trust you all that much. These are essentially the thoughts of a bank’s loan officer who does decide to approve your business for a loan. While you may be congratulating yourself on securing the funding you need, the bank will ironically make it more difficult for you to pay the money back. Why? A high interest rate is generally attached to a loan that is given to a business owner with a poor credit score.
“Getting approved for a loan counts as a victory,” states Martucci, “But if your loan comes with an unfavorable interest rate or restrictive terms, it could soon feel like a hollow one. Every lender is different, and most are cagey about disclosing exactly how they set interest rates due to the proprietary nature of internal borrower evaluations. But most are upfront about the fact that lower credit scores mean higher interest rates.”
It could be difficult to even get your business off the ground.
For many entrepreneurs, it feels impossible to start their businesses up. This is because low credit scores disable such would-be business owners from getting the funding they need to launch their companies.
“Many new businesses need banks loans to help fund their startup,” writes LaToya Irby on TheBalance.com, “A bad credit history can limit the amount you’re able to borrow to start a new business, even if you have a solid business plan and data supporting your business success.”
One’s credit score doesn’t matter when it comes to merchant cash advances!
Merchant cash advances are not loans. This is why applicants are always approved! Synergy Merchants’ unique merchant cash advance program enables all types of business owners to get their hands on much-needed extra working capital. Regardless of your credit history or length of time in business, you can be approved in less than 24 hours!