It’s a well-known fact that having less than perfect credit can affect various aspects of your personal life, such as your mortgage, obtaining a loan for a car and in other ways. Unfortunately, it can also affect your business. Even though it is highly beneficial to keep your personal and business finances separate, your personal money habits can spill over into your business. Find out how improving your personal credit score can be advantageous to your small business.

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You’ll get better interest rates

Having bad credit as an individual can affect the interest rates on your business loans. According to an article titled “8 Ways Your Poor Personal Credit May Negatively Impact Your Business,” author Peter Daisyme states, “If someone does take a chance on you and offers you any type of business credit, then you will most likely have to pay extremely high interest rates on that credit. Those high interest rates will then drive up the monthly costs that you and your business will have to cover.” Improving your personal credit score by paying down balances and lowering your revolving debt can help your business get a lower interest rate, saving you a lot of money in the long term.

You’ll have access to more methods of funding

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Following the recession of 2008, many small businesses were finding it difficult to obtain funding through banks and other traditional lenders. A blog post on the Small Business Administration blog titled, “Is Bad Credit Stopping You From Getting Business Loans” explored this phenomenon. “In a recent report, over 63 percent of business owners attempting to find funding say they most often targeted banks. Unfortunately, the success among these respondents of actually getting a business loan was a low 27 percent.” In the wake of a strong recovery trend, more businesses are able to get loans from banks again, but your chances of being successful are better if you have good personal credit.

You might make a better impression on lenders

The decision on whether or not to finance a business is dependent on a variety of factors. One such factor, as explained by the Small Business Administration, is your perceived level of trustworthiness. According to, “Character is the personal impression you make on the potential lender or investor. The lender decides subjectively whether or not you are sufficiently trustworthy to repay the loan or generate a return on funds invested in your company.” Having a good personal credit score can show a lender that you are trustworthy enough to pay them back, so it’s worth it to improve your score.

Working on your personal credit score to improve it is one of the easiest things you can do as an individual to help your business. By doing so, you will likely have better access to capital, which can increase your chance of success.


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This article was written by Alaina Brandenburger for CBS Small Business Pulse.