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638 EXP credit score-will i ever get a loan?

    • 37 posts
    October 8, 2007 6:18 AM EDT
    The previous posters are correct - even having a small business account still ties to your personal credit. That`s one myth that`s been spread far and wide through the Internet. From trying to startup a small restaurant here in Houston it is pretty tough. Banks don`t like to lend money for restaurants. I would say 200K would get you through one year of operating expenses.

    I would do my best to try to save at least 50-100K then go to a bank for the loan and use your savings as collateral. Or try to find a business partner.

    No Eternal Reward Will Forgive Us Now for Wasting the Dawn.

    • 731 posts
    May 14, 2007 8:34 AM EDT
    First of all, if you think your credit score is bad? why are you considereing using your personal credit to start a business?
    What type of business are you trying to start? How much do you need? Would it be a better idea for you to start your business as a corporation to avoid using your personal credit to establish the business?
    Having a small business bank account as a sole-proprietor still makes you garantor on the business.
    It does not help you establish your businesses credit, who told you that?
    Please read the following post it might help you understand the business credit ordeal much better
    Tell me what you think

    Edgar Monroy
    Web Developer / Owner / Consultant
    When starting your own business the need to "know-how" is greater than money!

    • 731 posts
    May 14, 2007 12:56 PM EDT
    First of all, How much money do you have saved to bootstrap your business?
    Secondly, How much do you know about the CAFE industry? Do you have any background in Managing and running a Cafe?

    Do you have any behind the counter experience per say; Seving coffee, latte`s and so forth? If the answer is no?

    Why not try working at one to see if you like it or not. Remember a 200K loan is a Huge commitment whether it`s on your personal credit or business credit.

    What if you do get a loan? How are you going to repay the loan? Have you thought of the what if`s? See Cafe`s are too risky and the banks know that. How do I know? Because at one point in my life I wanted to open a Cafe: My plans were to have a Sober Up Friday afterhours joint where people would come and sober up after a night of drinking (this was going to take place in Down Town San Jose,CA).
    The idea was good. But the Cash Down to start my idea was huge. So I decided to get a part time at a local Cafe to see what it would be like to operate one. I quit the first week! Why, Im better at drinking coffee than serving it.
    My point, make sure  that`s what you want to do for as long as it takes you to repay the loan and for the rest of your life. (if you are real serious about it)

    As for the Business Credit, It would also take some time to build  the credit, but you can use that as second round funding to push your business to the next level.
    In the mean time why not talk with family members and friends see if they are willing to help you. But honestly, avoid using your own credit to fund your business. (how do I know? I made that mistake when I first started my business) and I had my taste of good and bad experiences until I incorporated. Now Im working on the Business Credit and repairing mine at the same time.

    Nuevolution2007-5-14 17:58:43

    Edgar Monroy
    Web Developer / Owner / Consultant
    When starting your own business the need to "know-how" is greater than money!

    • 731 posts
    May 15, 2007 3:12 PM EDT
    620 credit score is not that bad. In real estate mortgage,  a 620 is the cut-off for conventional financing.  Not sure about small business underwriting, but I would definitely look further into it.    Good luck.

    It`s not!
    I seen people with worse credit, Incorporated and are driving BMW 7 series cars.
    Although, it`s tough to start business credit, what he needs to do is see what`s needed to get a business loan, give himself time to fix his credit rating and then go from there.
    In the mean time write a business plan or strategize his business

    Edgar Monroy
    Web Developer / Owner / Consultant
    When starting your own business the need to "know-how" is greater than money!

    • 731 posts
    May 15, 2007 3:48 PM EDT
    Well there you go!
    You have one thing out of the way. Have you tried grants? Or what about starting with a small loan at first? 250K is alot to repay. Is that amount really necessary? or are you adding in a cushion?
    Making a sound case (executive summary) is your best bet, most banks, investors won`t even look past the second page if they don`t seem interested.

    Edgar Monroy
    Web Developer / Owner / Consultant
    When starting your own business the need to "know-how" is greater than money!

    • 39 posts
    May 17, 2007 7:16 PM EDT

    Has your credit score been on the rise since 2002 or has it remained basically the same? How proactive have you been in trying to add positive items to your credit report? Is your credit card debt below 30%? Often times, the newer positive items that you manage to add are more important than negative items in the past.

    Just from getting a small auto loan and getting a new $5000 credit card to consolidate some of my CC balances on for a debt ratio of less than 25% has raised my score to over 710.

    Typically, if you want a good business loan (good - meaning good terms) your personal credit score needs to be at least 680 regardless of if the business has established its own credit or not.

    So to answer your question, I assume you theoretically "could" get a loan with a 638 FICO, but it wouldn`t be worth the horrible terms that come with it. I would say your best bet would be to work on improving your credit score before applying for loans. This can be done in a relatively short time if you do your homework no the subject. 

    JanetF2007-5-18 22:42:8

    If it were easy, everyone would be doing it...

    • 14 posts
    April 17, 2009 11:47 AM EDT
    If you are trying to get financing based on your personal credit score alone, a 638 is probably not gonna be enough. I would suggest working on getting that score built up a little bit more and also building a strong business credit score. With the two combined, you should be able to qualify for some financing.
    • 2 posts
    August 9, 2012 6:53 AM EDT

    Improving credit score is certainly a good idea but meantime why don't you try applying for loans that are little linear and have no much requirements. 


    I recently used a service where they don’t charge you an application fee, success fee or origination fee to help you get a loan for up to $50,000 and grants of up to $250,000 – in fact their services are 100% free and it has worked for my folks and could very well work for you: Loan & Grant Package. I was approved in no time and just followed the suggested requirements.


    Good luck

    • 927 posts
    May 14, 2007 12:51 PM EDT


    Most lenders will rely on personal credit information until the business has a track record of it`s own.

    Lenders are concerned with

    1. Ability to repay the loan

    2. Assets that will help ensure that the loan is repaid.

    So I suggest that you do a preliminary plan with basic financials before you start looking for a lender.


    Business Growth Masters, LLC -
    Capital Catalysts for Entrepreneurs
    Home of the Scalable Business Plan and QuikStart Capital Programs

    • 5 posts
    May 14, 2007 3:12 AM EDT


    Issues related to Layoff in 2002

    credit has been clean since 2003

    any chance for a small business loan (200,000-225,000)? Or should I not waste my time?

    I`ve considered starting a small business account to build business credit but they seem to all hinge on my personal credit. How does this work?


    sely2007-5-14 12:50:57
    • 5 posts
    May 14, 2007 12:08 PM EDT
    I`m planning to open a cafe ($200K-250K). I would most definately form the business as an Inc or LLC and obtain an EIN...but without buiness credit, wouldn`t they still check my personal credit for the loan?
    • 5 posts
    May 15, 2007 3:33 PM EDT

    i do have the experience...i worked and co-managed a cafe for 2 years. i also have several years of management experience in the corporate world. I`m almost finished with my business plan but wanted to see if there was even a chance for a loan before delving all the way in. 

    I really have no collateral...i don`t own a home, and asking relatives for loans is not an option.

    so what i`m hearing is if i can make a sound case in my business plan...that`s my strongest point. but what about the assets? if i have no assets to back it up, is it still possible to get the loan?

    • 9 posts
    August 9, 2012 2:10 AM EDT



    This is a good article. Improve credit score is quite difficult but not impossible. But an extra bit of advice which helps to improve your credit score. Always pay your bills on time. Late payments play a major role in driving down your score. Don't close unused accounts, because zero balance might help your score.

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