Can Your Personal Credit Hurt Or Help Your Freelance Business?


There are people who have started a traditional business who filed personal bankruptcy just a short time before.

How were they able to do this?

It is because their personal credit is completely separate from their business credit.

While I don’t agree with this system, it does work that way. You would think that lenders would look at the personal finances of the founder of a business. That would be a good sign I they will be able to control the business economics. But lenders don’t usually do so.

So I tried to get a loan for my freelance business and the lender said my personal credit was not up to par.

Why is that?personal credit

As I said earlier, traditional business owners have the advantage of not having their personal credit measured because the business and their personal finances are separate.

Freelancers normally do not file separate business taxes. The business and personal taxes are bundled together, and this means that lenders will look at everything.

This can be one issue in the world of freelancing, but do not let it hold you back from seeking lenders.

Some loan ideas for freelancers

If you believe you need a loan to get your freelance business off and running, there are several other methods you may consider.

Do know that I never took a loan for my freelance business.

You can try any of these:

  • Business grants. You will be competing against others and the forms can be stressful to fill out, but it can be worth the try.
  • SBA. The Small Business Administration will back a loan made by a lender.
  • Crowdfunding. You could hit up the variety of crowdfunding sources.
  • Online lenders. There are many lenders online that are less stringent, but they do usually charge higher interest rates.

Work on your personal credit

I highly recommend that you try to get your personal credit in good standing.

As a freelancer your personal credit could affect if you can rent any office spaces, vendor agreements and insurance rates.

Get a business credit card

A business credit card can be a huge help in building a good credit standing.

My friends over at The Simple Dollar wrote an excellent review where they tested a variety of business credit cards.

You really need to read: Best Business Credit Cards of 2016

Final thoughts

I hope this post will help you realize just how important your personal credit is in your freelancing business.

If you have any questions or comments, just post them in the comment section below.

Thank you.

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