Setting Up A Business Even Without A Good Credit Score
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Having good credit reporting does definitely improve new business owner's chances of getting capital resources for the new business. However, not every one has good credit history. Yet they manage to start a new business.

An entrepreneur with a bad credit score will need to look beyond banks for startup funding for the new business. Most banks including community banks are very particular about the credit score of an entrepreneur and are extremely reluctant to invest in an individual who has a poor credit history.

However, there are other sources of funding that an entrepreneur can look toward for the capital resources. The first choice is family and friends. Angel investors are also an option for an entrepreneur with poor credit rating. The most important part of a business proposal for an angel investor is the uniqueness of the plan.

An entrepreneur who is planning to open a new business but knows that his/her credit history is poor should spend a few months on trying to improve the credit score. One way to do this for an entrepreneur is by paying off the remaining payments in time. This will go a long way in improving credit history.

An entrepreneur with a poor credit rating should also keep track of credit history provided by the three different credit rating agencies. Most business analysts recommend that an entrepreneur fix one date every month for scrutinizing information that appears on the credit report. This will help the entrepreneur detect any problems in the credit report early on.

New business owners should also differentiate their business credit from their personal credit. While large banks focus on the entrepreneur's personal credit score when it comes to deciding on whether to award startup capital for the new business proposal, smaller community lenders and business-friendly banks focus on a combination of personal credit score as well as business credit score.

An individual's personal credit score is determined by several factors, including the outstanding debt balance on personal credit cards, the number of open lines of credit accounts, bill payment history and late payment history. The business credit score is determined by similar factors as well as linked to the tax ID. A business entrepreneur needs to get both these credit scores in order before approaching banks for seed funding.

An entrepreneur with poor credit history should work towards building a better credit report. This will help improve the entrepreneur's access to funds as well lower rates of interest on the seed capital.

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