Credit score (personal credit review)

The Financial Consumer Agency of Canada explains that a credit report summarizes how a person has used credit in the past, and that the credit score comes from that report. Lenders use both to decide whether to lend and at what interest rate. A business buyer can meet the term if a lender checks the buyer’s own credit history. See what lenders want to see from a business buyer.

How it works

Credit bureaus create the report when a person first borrows or applies for credit. The agency says the score changes over time as lenders update the credit history, and that bureaus and lenders use different formulas without sharing the exact details. It adds that the score you see may be different from the score a lender sees. BDC says that when a loan has no security, bankers also look at company management, the industry and the owner’s personal credit score and net worth. If a loan calls for a personal guarantee, ask whether the guarantor’s credit will be reviewed as well.

What to check or ask

• Which credit bureau report the lender will use, and whether you can see it first
• Whether a guarantor’s credit is reviewed as well as the buyer’s
• Whether anything on your credit report needs correcting before you apply