{"id":156,"date":"2021-05-13T10:17:32","date_gmt":"2021-05-13T14:17:32","guid":{"rendered":"https:\/\/www.equireinc.com\/blog\/?p=156"},"modified":"2021-05-13T12:09:34","modified_gmt":"2021-05-13T16:09:34","slug":"why-you-need-good-personal-credit-for-business-loans","status":"publish","type":"post","link":"https:\/\/www.equireinc.com\/blog\/business-loans\/why-you-need-good-personal-credit-for-business-loans\/","title":{"rendered":"Why You Need Good Personal Credit for Business Loans"},"content":{"rendered":"\n<p>Blog post by: <a href=\"https:\/\/helpmebuildcredit.com\">Help me Build Credit<\/a><\/p>\n\n\n\n<p>People tend to think that personal credit and business credit are in no way connected.&nbsp;These are the same people who don\u2019t put effort into building their personal credit because they say it\u2019ll barely come to use. They think business credit will come in handy soon enough, but personal credit is ok to do away with.<br><br>What you must realize is that building credit as soon as you turn 18 (or you can start building credit even before you turn 18 by being added as an authorized user on someone else&#8217;s credit card aka&nbsp;<a href=\"https:\/\/helpmebuildcredit.com\/piggybacking-credit-everything-you-need-to-know\/\">piggybacking credit<\/a>), is important and so beneficial for your future. Even more, it\u2019s directly linked to business affairs, such as when taking a business loan.&nbsp;<\/p>\n\n\n\n<p>You need personal credit for taking out a business loan.<br>You\u2019d never think that, right? Let\u2019s talk about it.<\/p>\n\n\n\n<p><strong>Business loans and personal credit<\/strong><\/p>\n\n\n\n<p>At anytime throughout your business career, whether at the start or right in the middle, you may&nbsp;want to get a business loan or a business credit line at Equire Inc.&nbsp;<br><br>Unless your business is a huge firm, banks and credit lenders will be hesitant to hand out a loan to your business. Statistics show that way over&nbsp;<a href=\"https:\/\/www.statista.com\/statistics\/817918\/number-of-business-bankruptcies-in-the-united-states\/#:~:text=In%202019%2C%20there%20were%2022%2C780,nationwide%20in%20the%20United%20States.\">22,000 businesses went bankrupt within the year 2019<\/a>. Banks are afraid to hand out loans without knowing you\u2019ll have the means to repay it. So, assuming you\u2019re not a huge company, though wishing you much success in getting there, you need a way to prove yourself worthy of getting a business loan.<\/p>\n\n\n\n<p>The only way a bank or lender will trust you enough to give your business a loan, is if they check your personal credit. That is why you need to start&nbsp;<a href=\"https:\/\/helpmebuildcredit.com\/how-to-build-credit-fast-4-easy-steps\/\">building credit at 18<\/a>.<br>Once the lender reviews your personal credit history, credit accounts, and so on, and they\u2019re pleased with what they see, they earn trust in you as an individual. They can then assume that the same credit responsibility goes on with your business affairs.<\/p>\n\n\n\n<p>Turns out, your personal credit is your only way to a business loan.<br>Happens to be, lenders will do the same, check your personal credit, when you apply for a business credit card.<br>If you\u2019ve got no business credit and bad personal credit, it\u2019s highly unlikely for you to get approved for a business loan. The lenders need at least for your personal credit to be good.<\/p>\n\n\n\n<p><strong>When will I be eligible for a business loan without personal guarantee?<\/strong><\/p>\n\n\n\n<p>There will be a time down the line when you will be eligible for a business loan without&nbsp;<a href=\"https:\/\/www.ondeck.com\/resources\/understanding-personal-guarantees\">personal guarantee<\/a>, that means keeping your personal credit out of the business.&nbsp;<br>Usually, if your business has several million dollars in sales and has healthy cash reserves, the bank and lender will start trusting your business and give it liability without a personal guarantee.<br>At that point in your business, you can get business loans without having your personal credit checked.<\/p>\n\n\n\n<p><strong>How to build good credit<\/strong><\/p>\n\n\n\n<p>In the meantime, until the millions start pouring in, here\u2019s how to build good credit so that you can be eligible for business loans and credit lines with your personal credit only.<\/p>\n\n\n\n<ol class=\"wp-block-list\" type=\"1\"><li>Have 2-3 credit cards open. You need a substantial number of credit cards to show you\u2019re credit worthy and can handle it. 2-3 is a fair and average amount.<\/li><li>Keep your credit card balances low in proportion to the credit limits on your cards. The balance on a card should ideally be less than 9% utilization, that\u2019s using less than 9% of your credit limit allowance. If 9% is not possible then try to stay at least below 29%.\u00a0<\/li><li>Stay clear of late payments. A late payment will go onto your credit report and be a credit eyesore.<\/li><li>Have a mix of revolving credit lines and loans; a mix of credit cards and mortgage or auto loans.<\/li><li>Never close your first and oldest credit card. As more time elapses from when you open your first card, the more credit history you acquire, and the better your credit is.<\/li><\/ol>\n\n\n\n<p>Read about the famous <a href=\"https:\/\/www.equireinc.com\/blog\">TD Business Loan<\/a>.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>People tend to think that personal credit and business credit are in no way connected, but you need personal credit for taking out a business loan!<\/p>\n","protected":false},"author":2,"featured_media":166,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[4],"tags":[],"class_list":["post-156","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business-loans"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v26.9 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Why You Need Good Personal Credit for Business Loans - Equire Inc.<\/title>\n<meta name=\"description\" content=\"You need personal credit for taking out a business loan. People tend to think that personal credit and business credit are in no way...\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.equireinc.com\/blog\/business-loans\/why-you-need-good-personal-credit-for-business-loans\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Why You Need Good Personal Credit for Business Loans - Equire Inc.\" \/>\n<meta property=\"og:description\" content=\"You need personal credit for taking out a business loan. 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