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How to Know if You Have Bad Credit

How to Know if You Have Bad Credit


Crowdfunding has become a popular option for entrepreneurs looking to launch a new product or service. It lets you tap into the collective efforts of friends, family members, customers, and individual investors to raise the capital you need to start your business.

Platforms like Indiegogo , Kickstarter , and GoFundMe make it easy for you to host an online campaign and reach potential backers through email and social media. Plus, there’s the added benefit of validating and refining your business concept through feedback from the masses.

Small Business Grants

Small business grants are an extremely attractive source of funding because, unlike small business loans, you don’t need to worry about paying them back.

Federal, state, and local governments offer a wide range of grants to help small businesses start and develop. The catch is that they are typically reserved for specific industries and causes that have been identified by the government, such as scientific or medical research or conservation efforts.

Friends and Family

If your family and friends believe in you and your business and are willing to invest in the future of your company, they might be a great resource.

But be careful. If you accept money from your friends or family, you inherently put them at risk. Make sure that they are fully aware of the risks and have a strong understanding of what you plan to do with their loan or donation.

If you’re worried about dinging your credit, there are some lenders that just do a soft credit pull—meaning it won’t affect your credit score.

If you’re afraid you have “bad credit,” make sure you understand the FICO score ranges before deciding that no lender would want to work with you. You might be underestimating your credit score or your loan options.

Lenders will typically consider your personal credit in the following tiers. Let’s see which tier your credit falls in and what this means for your business loan options:

  • 700 or Above:В For starters, if you’ve got a credit score of 700 or higher, then you meet the minimum credit requirement for most any kind of business funding out there—even the most difficult, like SBA loans or bank loans.
  • 650 to 700: If your credit score falls somewhere in between 650 or 700, then you’re still in pretty good shape. In fact, after you get a bit of business history under your belt, if your business is in good financial shape, you might still be able to qualify for an SBA loan with a credit score in this range.
  • 620 to 650: When your credit score starts to fall into the 620 to 650 range, that’s when your options become a bit limited. That said, with a score like this and after a few months of business, you could still qualify for a medium-term loan from an alternative lender.
  • 500 to 550: With a credit score that falls somewhere in between 500 and 550, then you’ll definitely have a bit of trouble qualifying for a loan. That said, though your credit score won’t help you in qualifying, that doesn’t mean you don’t have options. Especially if you get a bit of business history under your belt, and you have some business financial stats to show for it, then you could still for certain types of short-term or secured funding.

The Bottom Line

Do startup loans with no credit checks exist? Not traditional business loans. But with a little bit of creativity, you can come up with the capital you need to start your business even if you have bad credit.

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