It’s not easy for people of color to make their mark in the business world, especially for Latinas in the US. In our article on ‘5 Upcoming Fall Grants for Latina Entrepreneurs’, we highlight that one of our struggles is finding the funding for our ventures. The Amber Grant, Comcast Rise, and The Patrina Foundation are examples of grants Latina entrepreneurs can apply for. But sometimes, trying your luck at major banks and other financial institutions is inevitable as a career woman.
So, how can having a good credit score heighten your chances of success as a Latina entrepreneur? Read on to find out.
1. Qualifying for Loans Made Easier
If you have a good credit score, lenders or creditors will be less hesitant to provide the finances that you need. A feature on hard vs. soft credit checks by Upgraded Points explains that one way to do this is to keep track of any hard credit checks that will be performed on your account. Too many hard checks in a short timespan can actually lower your credit score by zero to five points. Apply for loans sporadically to avoid hard checks and keep your score high. This way, lenders and creditors will see that you’re a responsible borrower.
2. Protect Your Personal Finances
Many Latinas hesitate to acquire financial resources through loans or credit. An Urban Institute study on Latino Immigrant Entrepreneurs attributes this to cultural roots, and how POCs have been taught to avoid incurring debt since childhood. However, you don’t really have to worry about lenders coming after personal assets as long as you are careful. In fact, it can even protect your personal finances – with a good credit score, you can apply for business credit instead to prevent your personal credit rating from being impacted by financial issues.
3. Get Access to Office Space and Equipment
As previously mentioned, lenders and creditors will often check your credit history before proceeding with your request. The same can be said for landlords if you ever plan to rent office or storage space. Latina-owned Cuban cafe and mini-chain Colada Shop has opened branches in places like Dupont Circle, Wharf, Potomac, Maryland, Fairfax’s Mosaic District, and most recently, Bloomingdale’s Department Store. Owner Daniella Senior says that expanding to different spaces has definitely helped broaden Colada Shop’s target customers.
4. Get Better Deals With Suppliers
Suppliers and their teams prefer to work with business owners with a good credit score. If suppliers can see that your business is stable enough to aid you in repaying debts promptly, then they will be more comfortable in allowing you to purchase any equipment and inventory on credit. Moreover, having a good credit score also makes it easier to negotiate more favorable terms with them. Some suppliers, however, can be unfairly biased against Hispanic-owned enterprises – in this case, it’s also good to look at other sources such as the NOVAHCC.
5. Negotiate Loan Terms Better
Lastly, you can negotiate your loan terms and even extend your payment period by leveraging your good credit score. As explained by an article by Forbes Advisor, you can ‘shop’ for loans and acquire more options if you’ve maintained your credit score well. You can also use the best offer as a bargaining chip to get even better loan terms from other financial institutions. This method is especially effective for mortgages and car loans, which is useful if you’re looking to acquire those as business investments.
That said, we’ve listed five very useful benefits that you can enjoy just by keeping your credit score healthy. As Latina and minority women entrepreneurs, it’s important to do all that you can to maximize your credibility in order to gain an advantage in this competitive world.