It can be hard to hold back your dreams of being an entrepreneur. When you are finally ready to make that jump into being a business owner, nothing should stand in your way! That is why you should definitely take charge of our personal finances before you open your business. Here is why your personal finances should be sorted out and how you can go about doing just that.
Your Credit Will Matter When Opening a Business
If you plan on opening your business from the ground up, working on your own or with just one or two other partners, your personal financial history will have a huge impact on your business. Since your business is new, it does not have a credit score or financial past for lenders to assess. Instead, they will be looking at your personal financial standing each time you apply for a loan or finance plan. It is essential to clean up your own personal finances so that you look desirable to lenders as a business owner and, in turn, as a business.
Simplify Your Financial Situation
Many people have multiple debt accounts open at once. While you may have no problem paying each account on time every month, this may change once you open your business. You will have less time to be paying your personal bills individually as you spend more time focusing on your business. To simplify your financial situation, take out a personal loan at Oz Money and pay every debt account you have in full with the cash from the loan. Then, you will only have one monthly loan payment to make each month! Not only will this be easier to manage, but it can also save you money if you are able to lock in a new lower interest rate.
Check Your Credit Score
The easiest place to start when fixing your personal finances is to check your credit report. Look at every mark on your credit score and every open account and make sure they are all valid. Studies have shown that credit reports are wrong about 26% of the time, with one or more errors on the report. If you spot an error, start working to get it fixed. Call your bank, your credit cards and he federal government who is in charge of credit reports until the error is fixed.
In addition to general errors on your credit report, you can also start working on trouble areas that may look bad to a business lender. Pay off as much debt as you can, make timely, monthly payments and resist opening new accounts until after you have your business up and running. All your hard work will be worth it when you have your dream business!
Avoid New Debt Before Opening a Business
Chances are that you are going to take on debt when you start your business. This is not a bad thing! Most businesses begin when an entrepreneur finally takes out that loan they need to start their business. However, before you start your business, try not to take on any new debt. Not only will new debt mean a hit on your personal credit but it also means you will have less cash to put toward your business each month. So, rather than buy that new car you want, remember that what you really want is to be our own boss and run your own company. Keep your goals in mind and your debt down!
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