What's a Good Credit Score to Start a Business With? |
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The question of "what's a good credit score"
for a business loan has multiple potential answers. These answers
depend on the structure of the loan you are seeking. You will need good
credit, typically a score of over 700, in order to secure a business
loan. From here, though, there is a range of potential scores that will
result in a successful loan application.
Guaranteed Business Loans
A loan guaranty from a government agency, like the Small
Business Administration, can make it easier to secure a loan. Your
lender may tell you this option will be required in order for you to
secure your loan. The SBA will assist you, but you will need to meet
its own requirements for creditworthiness. While they tend to be more
lenient for short credit histories, SBA loan guarantees do require high
credit scores.
Secured Business Loans
If you secure your loan with an asset, you may get away with a
slightly lower score. It is risky to place a personal asset as
collateral. For example, taking a second mortgage on your home could
result in a foreclosure if your business fails. Taking this risk can
make sourcing a loan much easier, however. To get a secured business
loan, you may need a credit score of only 650 or slightly lower.
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