If you're a small business owner in Canada, your personal credit score matters more than you might think. Unlike in the United States, Canadian lenders rely heavily on personal credit when evaluating business loan applications, especially for businesses under 5 years old.
Why Banks Check Your Personal Credit
When you apply for a business loan, line of credit, or even a business credit card, the lender will almost always pull your personal credit report. This is because most small businesses don't have an established business credit profile, and even those that do haven't been around long enough to prove their creditworthiness.
Banks see your personal credit score as a reflection of how you manage financial obligations. If you've missed payments on personal accounts, they assume you might do the same with business debt.
The Magic Numbers
Most traditional banks want to see a personal credit score of at least 680 for business financing. The Business Development Bank of Canada (BDC) may work with scores as low as 600, but you'll pay higher interest rates.
If your score is below 600, you'll likely be limited to alternative lenders who charge significantly higher rates, or you may not qualify at all.
What You Can Do
The good news is that credit repair can help. If your personal score is being dragged down by errors, old collections, or inaccurate information, disputing these items can raise your score quickly.
We've helped business owners in the GTA increase their scores by 100+ points in under 90 days, going from denied to approved for the financing they needed.
Next Steps
If you're planning to apply for business financing in the next 6-12 months, now is the time to address your personal credit. A free consultation can help you understand exactly what's on your report and what can be done about it.