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Credit Rating
A credit rating is a score given to an individual or business that relates to their predicted ability to pay back the amount of a loan. While no one can know for sure whether or not a particular individual or business will be able to pay back a loan, the credit history is a good indication of this factor. Credit reporting agencies collect the credit history of individuals and make it available to lenders and credit card companies. This credit history is used to determine if an individual or business is going to be approved for credit.
Many small businesses do not have much of a credit rating. When this occurs, the lender will usually look at the credit rating of the individual running the business to determine whether or not to award financing to the business. As the business builds their credit score, they can begin to apply for credit based on their own merit.
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