4 Ways Bad Credit Won’t Trump Your New Tech Startup
Bad credit has a habit of ruining your financial prospects. If you are thinking about starting a new tech company, you may be worried about your poor financial history. The truth is that, according to the experts, you don’t have to worry about that! These are the four main reasons why bad credit doesn’t have to define your tech startup.
1. Personal and Business Credit are Two Different Things
For a start, people have to realize that there’s a difference between your personal credit rating and your business credit rating. Just because you personally have a bad credit rating doesn’t mean that the business does as well.
In the very early stages, investors have to focus on the CEO, as opposed to the business, but you can get past this. As soon as you start building credit with your tech startup, your personal history becomes irrelevant.
2. You Can Bootstrap
The truth is that bootstrapping is becoming more and more common. It’s no longer necessary to seek out large amounts of external investment. You can get by with what you have.
For example, many startups decide that they will barter their services with startups in similar niches. It’s why coworking spaces have become so popular in recent times.
3. Take Out Bad Credit Loans
You can always take out a bad credit loan. This is a loan which is specifically geared towards those with bad credit ratings. The idea is that you will use your income and your bank account to prove that you have the means to repay the loan. Bad credit loans may have higher interest rates, but the application period is far shorter.
In some cases, you can have the money in your account within 24 hours.
4. Not All Investors Care
Most investors are interested in what your company can do through its concept, as opposed to your history within your credit cards. In a lot of scenarios, they won’t take a second look at your credit history because it’s simply not relevant. You are not paying them back. They are simply sharing in the profits of your company
This applies to all forms of investment. You may be engaging in a joint venture, or you may be inviting venture capitalist investment to get things done. However you attract investment, it doesn’t actually matter what your credit rating is.
But there are still a lot of advantages to building up your credit history in the first place. Don’t dismiss the idea of improving your score because it will make it easier to attract investment for your tech startup in the short-term.
One of the easiest ways to build up your credit rating is to take out a small loan and to successfully pay it back. Bad credit loans are ideal for this because your performance is still reported to credit reporting agencies. You can steadily borrow more and more money as you go.
Think about how you can repair your credit rating today.