How will getting an unsecured signature loan affect my credit?

[mccallb]

Hullo!

I am in the process of getting my start up funded and finding it difficult to get any kind of business loan with such a new company. Many of the options available to me as a corporate enttiy are way worse than what I could/would do personally as I have good credit.

So right now I'm considering getting a signature loan for about 10K to help kick off my company and I want to know how badly that will affect my credit?

Right now I have about 7% util on 120K worth of credit in revolving, so I could easily swing 10K worth of charges, etc, but I"m desparate to separate my finances from the company(sole prop for last 2 years, INC this year)

I COULD just get "another" credit card in my own name, or just ring up 10K in charges, but I know for a fact, jumping my util to 15~ will drop my fico by 10-15 points at least, so I'm just trying to minimize the damage to my credit by doing this.

Any suggestions would be awesome!

[Appleman]

Some reports may give you a slight ding for a finance company but I doubt it will hurt you much at all (complete guess 5 points).

Definitely check all of the soft pull sites. Sofi.com, LendingClub, prosper,.....

You could go ahead and get a loan to cover the $10K and remaining revolving debt (if you carry any debt month to month). Might be more difficult to seperate personal from business with this plan.

[mccallb]

yeah i soft'ed lending club last night and they were willing to give me 30K, but the apr is way higher than my credit union or usaa who i have good relationships with.

The nice thing about getting a 10K loan and then throwing it in my business bank account is i can get like a chase ink/etc and go ahead and start paying people and it keeps things fairly separate.

But the big data point for me is : opening a new personal loan shouldn't hurt too much?

I mean a personal loan of 10K in my overall file should be a drop in the bucket. I have 100K in car loans with DCU alone.

[takeshi74]

---

@mccallb wrote:

But the big data point for me is : opening a new personal loan shouldn't hurt too much? 

---

Difficult to say.  Impact is never just about the change itself but one's credit profile and how the change factors in.  Impact of a given change may vary depending on one's credit profile.  Consider the standard factors is about all we can advise.

http://www.myfico.com/crediteducation/whatsinyourscore.aspx

You'll drop your AAoA with a new credit account but by how much depends on your current AAoA.  You'll incur an HP.  That impact also depends on your credit profile.  HP's are generally a small factor but they can have a bigger impact for those with thin credit profiles and/or credit profiles with issues.  Having a new credit account also has an impact but, again, that impact will depend in part on your credit profile.  If you don't have any installments you'll probably see a boost to Credit Mix.  Not sure of the impact to Amounts Owed but a loan's balance to loan ratio typically doesn't have as much impact as revolving utilization.

---

@mccallb wrote:

I COULD just get "another" credit card in my own name, or just ring up 10K in charges, but I know for a fact, jumping my util to 15~ will drop my fico by 10-15 points at least, so I'm just trying to minimize the damage to my credit by doing this. 

---

A business card that reports to business and not personal won't have an impact to your personal revolving utilization since it doesn't show up on your personal reports (unless delinquent),  Decisions for such cards are based on your personal credit.  The HP will still hit your personal report.

[mccallb]

good info - that all makes sense.

I know that adding 10K debt to my revolving profile would have a huge effect.  would adding an installment loan have the same impact.

The way i see it, 

Getting a new credit card with a 10K limit and maxing it out has those same negative effects you just mentioned, 1~ (other CU) HP and AAoA hit.  SO it mainly comes down to if the actual 10K of installment debt will hurt. I Have 80k/100k in auto loans and 278/300K real estate loans in addition to about 7-8% util on 120K revolving credit

[takeshi74]

I may have still been editing my reply at the time you replied but:

---

@takeshi74 wrote:

Not sure of the impact to Amounts Owed but a loan's balance to loan ratio typically doesn't have as much impact as revolving utilization.

---

[Kevin86475391]

Since you already have two large installment loans reporting, I suspect (but obviously could be wrong) that adding another relatively small one won't have all that much impact. If you've recently bought a score from MyFico you could use the simulator to get a better feel for the impact. There's a simulation for adding a personal loan.

[Revelate]

Other than the inquiry and new tradeline change to AAOA, won't make a bit of difference to your credit.

Anyway if it makes sense financially to do so, do it.  If you're incorporating, get the Ink for the business entity instead though it's potentially a longer walk than qualifying for it as SP... though even as a SP keeping expenses seperate is smart.  I do some things which aren't paid W2 and I drop all of those expenses where I can on the Ink and Amex Business.