These days, you’d be surprised how much reliance you need on keeping a steady credit score. That means buying that dream house you want so much, or even something as simple as buying a car or applying for a new credit card. If you don’t have the right credit score, you may be left with nothing to help you purchase what you really want. So imagine how crucial it is to improve your credit score as a startup founder.
You’ve begun a new business, and here’s where you want to keep your stature. If you begin crumbling and start running up credit cards, it won’t be long before they become overdue. The next thing you know, there’s nowhere else to borrow money from. Your business is out of luck as a result. Here are three reasons why it helps to improve your credit score.
It Shows Your Seriousness as You Improve Your Credit Score
The first thing that a lot of investors are going to look at before dropping a single dime in your startup is your business history. They want to know what they’re getting into. They won’t just give their money to any “schmo.” And that includes taking a nice glance at your credit score.
It’s here you want to make sure you improve your credit score to something reasonable. Does it have to be perfect? No, nothing is, especially in this day and age of inflation. But it has to be reasonable all the same. Without that, and with a low score coming back, their confidence could easily go from 60 to zero. Within a matter of minutes. Then they’re off to the next startup, and you’re stuck.
So making sure you keep up to improve your credit score is ideal. Pay off any credit cards you owe as soon as you can, even if that means cutting back in other areas. Got business partners? Keep them pleased with consistent payments, and don’t fall behind. More importantly, don’t borrow from too many people. You’d be surprised how often that could pop up in your credit history.
Your Investors Will See Confidence
Remember above when we stated that investors look over your history? The credit score is a crucial part. Sometimes they’ll even look past your ideas and gauge you on this alone, to see if they’re investing in a lemon or not.
But, if you take the time and effort to improve your credit score and keep everything balanced (again, without over-lending), they’ll see this. They’ll know that you’re a business person that can keep their head on a swivel and move the flow properly. This will instill the necessary confidence, going along with whatever ideas you’ve provided them and assuring you’ll continue to improve your credit score. Even with their money being the focus this time around.
Responsibility Is Key
Finally, a low credit score is an easy tell when it comes to responsibility. If you have too many credit cards or bank debts due, it could show that someone doesn’t have them. Without that, good luck convincing anyone that you can run a startup, even with good partners.
This is where you need to be responsible. You need to make sure that, even with so much money to develop a business, you have enough set aside to cover the basics. This means paying the bills at the time they need to be paid. It also means paying your people so that you don’t suddenly build bad word-of-mouth from someone on the inside. Most importantly, it means keeping your investors happy, as well as your customers.
As you start your business, you don’t have to worry about all this – at first. But the first step in accepting responsibility comes back to improving your credit score. Any sign of turbulent history is going to stand out like a sore thumb. And that’s a red flag for any kind of investors, as they may believe you’re due for a repeat incident. Even if you try to convince them you’ve changed, they have it on record that you certainly may not. No matter how great your selling techniques are, they’re nothing without a little backbone.
The bottom line is that a credit score is absolutely pivotal if you want to get anywhere with a startup. There are too many people out there relying on the wrong things for business instead of the basics. As you improve your credit score, you increase your stance on being able to run a startup properly. Combine that with what you have in store for the business, and investors are as good as yours. The rest is up to you, of course, but don’t take your credit for granted. Improve your credit score and make it work in your favor!