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April Brissette is chief lending officer at Bankers Healthcare Group, the leading provider of financial solutions to healthcare professionals. For more information, email firstname.lastname@example.org or visit www.bankershealthcaregroup.com.
Keeping your credit score in good standing can have a big impact when it comes to growing your career and practice.
With the responsibilities of managing a practice, caring for patients and keeping up on the latest techniques, dentists may not give much thought to their credit scores. However, it’s worthwhile to know your credit score and keep it in good standing, especially when it comes to building your career or growing your practice.
From a lender’s perspective, an applicant’s credit score indicates potential risk-the lower the score, the higher the risk-and is often the biggest component in whether or not you get an approval. As a matter of fact, the majority of lenders have a minimum credit score requirement as part of their approval process, regardless of debt-to-income ratio or income.
From a borrower’s perspective, a credit score can have personal and professional impacts. Here are four to consider:
1. Your credit score can impact your ability get a job.
Many employers perform background checks on applicants, particularly in the dental and health care fields, where credentials and history can be easy to find online by anyone. It can take more than crafting the perfect resume and lining up references when applying for a job-be aware that your credit may also be pulled. A low score can indicate a character trait like irresponsibility to a potential employer.
2. Your credit score can affect your ability to borrow money and/or secure credit.
The top factor a creditor looks at when determining credit or loan approval is the applicant’s payment history, which is the biggest component of your credit score. If you historically haven’t made payments on time, a lender could assume continued behavior. In the eyes of a financial lender, your past can be the perception of the future. While it’s not impossible to be approved with a low credit score, it could cost you more in interest because you might be seen as a higher risk than those with stronger credit scores. It’s much more smooth sailing if your credit score is in good standing.
3. Your credit score can influence your future earnings.
Let’s say you work in a group dental practice and want to open your own office. A low credit score could prevent you from getting a business loan and force you to put your dream on hold. The need for liquidity is huge when starting a practice or even expanding an existing one. Most can’t do it without the help of financing, which can be nearly impossible if you have a low credit score.
4. Your credit score can impact your personal financing.
Your personal and business financial behaviors are often interconnected. Many solo practitioners borrow in their personal name for the business-a good example being a credit card. Missed payments on those and similar business debts that you are personally liable for can cause a poor credit score. That can potentially prevent you from being approved for a personal loan for financing a home, vehicle or education.
Good credit matters
There are many resources out there to help you understand your credit score, as well as protect and build it. Credit Karma is one that provides free credit scores, reports and monitoring that you can check online or through a mobile app as often as you’d like to see the monthly changes and what’s impacting your score.
In today’s data-driven world, many lenders purchase data, so even if you’re not currently looking for financing, you could be excluded from a potentially good offer that you might not have considered for the present.
Remember that your credit score determines your future borrowing power. Regardless of income, collateral or the circumstances, bad credit can prevent you from borrowing. Good credit, however, can help you get the dream practice you always wanted to start, and help you flourish both personally and professionally.