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Personal Credit Scores – How It Affects Your Singapore Business Loan

A lot of businessmen believe that it is the company that is applying for a business loan, not them personally. In that case, their personal credit record should not be taken into account when their company is applying for a Singapore business loan. A company after all, is a separate entity on it’s own.

However do not neglect the fact that you are the driver and promoter of the company business. The business may not be able to function properly without you. That is why your personal credit record can be a reflection of your company. A lender offering Singapore business loans is justified to take into account your personal credit record for assessment for a business loan.

Singapore business loan lenders will take a look at your personal credit record whether you like it or not. That means that it matters that you have a credit record that the business loan lender finds satisfactory.

What is a personal credit rating?

There is a central database that collects your personal payment records for your legitimate personal loans. As long as the loan that is taken up on your personal name is from a proper financial institution, most probably you payment record is stored. This includes personal credit facilities like credit cards, personal overdrafts, personal car loans, housing loans, etc.

If you even think that a bad debt issue with a bank years ago should never see the light of day, you are wrong. It will be reflected in your credit record. However, whether it will be taken into consideration by the lender of a business loan depends on the lender’s own internal assessment policies.

Even if a bad debt had been settled, the record will still be there.

Singapore business loan lenders use these information to judge whether you will be a good customer or not. Since they are going to put their money at risk, it is only justified that they have some basis to judge your financial management, especially if this is the first time that they are dealing with you.

So what makes a good personal credit record?

The number 1 rule is to pay your debts promptly.

Your personal credit rating can determine the success or failure of your business loan application. Imagine your Singapore business loan application being declined because you didn’t make time to pay your credit card bill last month. You don’t want that.

If you do not have any loans to your personal name, your credit record will be “clean”. A clean credit record does not help a business loan lender to judge whether your credit record is favourable or unfavourable. It will be a borderline case.

In this instance, the best thing is to have at least 1 personal credit facility and make prompt payments without being overdue each month. This will show that you are responsible with your personal finances and your credit score will start to build up. This will certainly help your case to get a Singapore business loan approved.