Credit and Your Space Hunt

Now that you understand how credit works, it is time to explore the role it plays in your ability to secure space.

Money is only one part of the equation when leasing or financing the purchase of a property. As mentioned previously, your credit history can dramatically affect your options. If you are buying, good credit can mean lower interest rates, fewer fees and more choices between lenders, while bad credit can translate into high interest rates, more fees, greater restrictions on your options and closed doors. High scores mean you pay less over the life of the loan, while low scores mean you might pay premium rates. High scores might also qualify you for special programs and incentives closed to those with lower scores. If you are leasing, good credit can mean favorable lease terms and conditions, and determine whether you get a space at all.

Personal credit is not always separate from your business credit -- especially when creditors deal with start-up businesses or fledgling nonprofits. In these situations, until the business or organization has existed long enough to establish a solid financial track record and its own credit history (which could take years), your personal credit history and score might be the only basis for creditors' decisions regarding your new enterprise.

If more than one person owns the company or sits on the board of directors, then the credit and finances of everyone involved might be considered. This can be advantageous in securing more opportunities (unless, of course, the co-owners or board members have bad credit and finances) because creditors will regard the risk as shared -- i.e., they will have more people from whom to request repayment if problems ensue.

The next section, Lending Criteria, discusses in greater detail the credit items and issues lenders and creditors consider when providing loans and other types of credit.