Just as individuals need to be vigilant about their personal credit scores, it’s important for businesses to also maintain a healthy credit profile. Lots of things can affect a businesses credit profile such as paying bills on time, past or ongoing legal issues, tax or regulatory problems.
But what about credit checks, do they impact a businesses credit profile?
There are two types of credit check, a soft check, which has no impact on your credit score. They are used to check a company's credit report for things such as loan pre-screening, credit monitoring, risk assessment or background checks. On the other hand, a complete check leaves a trace and may make it more challenging to get credit, especially if there are numerous credit checks in a short space of time on your profile.
It’s recommended that businesses regularly monitor their credit profile using soft checks with the likes of Experian or Equifax as a proactive measure. It allows a business to stay informed about their credit standing, identify potential issues, and address inaccuracies.
Will applying for a business loan affect my credit score?
Applying for a small business loan will not impact your credit score. Most lenders will run soft credit and identity checks when you apply, meaning they have no impact on your credit score. It’s only when you decide to take out the loan that the lender will run a full credit check.
If you are hedging your bets and apply for several business loans at once, this will create lots of ‘soft-footprints’ and could have a negative impact on the businesses credit score. It’s best to be more selective and just apply for one, or use a funding platform that specialises in unsecured loans for small business such as Same Day Business Loans.
Think a small business loan is just what your business needs? Same Day Business Loans may be able to help, have a look at how our process works and have a read of our FAQs.