When you own a business, you often start establishing a business credit score on top of your personal credit score. There happens to be many benefits of separating your personal credit score from your business credit score, especially when working with commercial lenders.
Once you get your first job, you start having a personal credit score under your belt. Jobs, credit cards and loans play a role in your personal credit score. Companies like Equifax and Experian are popular places that keep track of your personal credit score. You credit score ends up saying a lot about you to commercial lenders, like your ability to pay debt back.
Information that is usually included on your personal credit score include the number of credit accounts you have opened, like mortgages, credit cards, auto loans and more. Also, information like the amount owed on each of these accounts and how much you pay monthly on them. This is why it is important to make proper payments on time and avoid any late payments that may cause a delinquent mark on your credit score.
Personal credit scores range from 300 to 850 points, with a score of 680 or higher being considered an excellent score to most commercial lenders. Each agency look at scores a little differently, but on average, you should be striving for a score of around 680 or higher.
Commercial lenders will often times take a look at your business credit score over your personal credit score and that can be a good thing.
When a business issues another business credit, then that is when your business credit score really starts accumulating. This is often times the largest source of lending. The business credit bureaus are responsible for gathering information on your business and the scores range from 0 to 100 with 75 or more being considered excellent.
There are benefits to keeping your personal credit score and business credit score separate when applying for extra funding from commercial lenders.
Using your business credit score when dealing with commercial lenders can sometimes get you almost 10 times as much extra funding and can really help expand your business. This could get risky thought, especially if your business goes under. Also, keep in mind that if your business is sued, then your personal assets could be at risk. A helpful tip is to start early by setting up a business checking account at the beginning and also getting a separate legal entity. This helps keep your business assets separate from your personal assets, which is always a good thing.
Level 4 Funding LLC Private Hard Money Lender
Arizona Tel: (623) 582-4444
Texas Tel: (512) 516-1177
Dennis@level4funding.com NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave |Austin | Texas | 78701
About the Author: Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.