Hey guys Sean Mory joining you for another session of LenCred Credit Geek Q&A. Joined always by Dustin Weitzell. We have not been here for a while guys sorry for the lack of videos we have been so busy with all the clients coming in here at LenCred that we have had to delay some recordings. First, question comes from Darrell out of Chicago today.
Darrell is wanting to know, “Why does personal credit matter when I am getting capital for a startup business?” Great question! Dustin do you want to start? There are so many things that come to that. Most of our clients that have never borrowed for a business before wonder, why cant I just go get an EIN and now go get $50,000 for my EIN. It is not for me it is for my business, why do you care about my personal credit? We if it was that easy then everyone would go spend 5 minutes get an EIN and go get $50,000 from the bank.
So it give the bank and understanding of how you are using your personal credit, which is a good indicator on what you are going to do for your business. Piggy backing on that, not only is it a good indicator, it is all you have to go off of to determine your borrowing power. Your borrowability if I can make up a word here. The simple fact is that your credit is important, it is imperative, and it is vital in getting the funding you need the RIGHT WAY and with the right partners. In conclusion, personal credit matters because you have nothing else to go off of, unless you are going to bring collateral and down payments money to the table. But even then your credit is going to still matter, because they are going to want to know how you borrow personally. To determine how you are going to borrow professionally.
They really do not care what your projections are because no one goes to a bank saying we are probably not going to do vary good our first six months and we are probably going to bomb after that. They are most likely going to give you an approval based upon your household income today and how you have handled your credit. Not based upon what you are telling them you are going to do! If you can wrap your head around that make everything else make more sense.
Accept the reality of the situation and deal with it accordingly. Do not fight it, it is not going to change. You can not like it or you can follow the rules and WIN!!! Well Darrell I hope that helps answer a little bit about credit for startups. Guys go check us out at www.lencred.com we would love to here from you. As always, thank for joining for another session of LenCred Credit Geek Q&A.