Can I still setup my own business if I have a bad credit rating?
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There is a lot involved in starting a business. For example, you need startup money. This usually comes from a bank in the form of a business loan. However, a new business does not have any established credit, which means the bank looks at personal credit to see how the business owner pays their bills. The bank believes that how the business owner pays their own bills is a reflection of how the business loan and other expenses will be paid. If you have bad credit, this could mean bad news when trying to setup the business.
It depends on what kind of business you have. Some businesses require very little in the way of startup costs. Internet businesses, in particular, do not require much money to start, so there may be no need for a loan right now or in the future. This is the ideal business for someone with bad credit to start.
However, some individuals may set themselves up as an ltd company, which means they can designate individuals as directors. Some will set up a family member or a friend as a director and that director can acquire the business loan if their personal credit is good. What this can do is establish credit in the business name. Once that credit is established, any and all credit providers will look at the business credit rating and not the credit rating of the owner.
So yes, you can definitely setup your own business if you have a bad credit rating. Granted there may be a few more steps involved, but there is a way around it. Just make sure that you review any and all options before you designate others to use their personal credit rating to secure financing for the business. You must also make sure that all bills for the business are paid on time because you not only damage the business's credit, but the credit of the individual whose credit was used to secure the loan.
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