Does Bad Credit Signal Bad Business Management
Over the last two decades the statistics quantifying women owned companies has seen phenomenal growth. As more women get involved with operating their own businesses the more susceptible they become to the financial ups and downs that come with owning a company. Of course more and more women will realize success and all the accolades that come with that success, but along the way they will undoubtedly experience points of financial distress. It is during the difficult times when a person’s ability is truly defined so should we suggest that a woman that has bad credit is actually a poor business leader?
I am sure that any successful business women will recall points on the road to success that involved juggling creditors and maneuvering through unworkable budgets. Businesses inherently go through down cycles and when you are ambitious you often try to take on more than your business can handle. We all learn from our mistakes, but let’s face it, we have to make them first. With that said, operating a business often involves what may seem at times insurmountable debt.
Naturally as you incur more debt the higher the probability you will lose points on your credit score. Any score calculator would automatically deduct points from your score as your debt grows, so the algorithm these folks in the credit reporting industry created handicaps new and early business owners from the start. In a perfect world all your bills would get paid on time, but in reality, because you are not working and getting a set paycheck that you can manage accordingly, your risk for default grows exponentially.
Many of your outstanding invoices will not be paid on time, inventories will fluctuate dramatically, and certain creditors must be paid first for a business to continue. This is a chess game and not paying a creditor might actually be a good management decision. That is why bad credit does not mean bad management.
There are many stories behind a credit report and what we see on paper is not indicative of a business owner’s ability to manage their credit and overall business. That is also why credit is repairable and measured in periods of time. Even the guys in the credit reporting industry knew there should be a shelf life for derogatory posts.
There is almost no doubt that any successful business owner will tell you of a time where their credit history was in the toilet. Just consider the fact that every credit report starts off bad before it becomes good. This is the reason why many alternative financing companies offer business loans for women with bad credit. There are a lot of good companies out there with bad credit and there is no way a piece of paper can demonstrate the management abilities of the owner of that history.