Starting a business is a dream for millions of people, and yet very few actually succeed. Those that put in the planning and effort before launching are those most likely to thrive.

It might surprise you, but part of planning for your business success includes some attention to your personal finances. Getting those squared away can have a positive impact on your business.

How Your Personal Finances Affect Your Business

It seems like your personal and your business finances would be two separate things, right? In fact, because your business is new (or nonexistent), many lenders and vendors will look at your personal credit scores to determine your creditworthiness. In fact, as a small business owner, your personal financial history will likely be part of every business credit discussion you have. If you have a history of bankruptcy or late credit card payments, you might not qualify for critical financing, or might only qualify at a high rate.

Keeping your personal credit history squeaky clean can open up financing opportunities you wouldn’t otherwise qualify for. Let’s look at how you can make sure your personal finances are up to par.

1. Know Your Credit Scores

Do you know what your personal credit score looks like? If not, it’s time to get acquainted. There are many free resources that will provide you with your scores from the top three credit bureaus (Transunion, Experian, Equifax). I’ve had a personal relationship with Experian for years and feel like the monthly expense has been worth every penny as I’ve watched my personal credit score improve over the years. They’ll typically show your score on a scale to help you understand if it’s Excellent, Good, and so on.

If it’s not 650 or higher, you will likely not qualify for low interest financing.

2. Work on Building Your Credit

No matter what your credit score is, there’s always room to improve to build a strong credit history, but this is particularly important if your score is low or you don’t have much of a credit history, and it’s key to do it before launching your business.

You can build your credit by opening a credit card or two, making charges, and then paying off the balance in full before the end of the statement period. In fact, making timely payments on any obligation you have, including your mortgage, an auto loan, or a credit card, is the single most important thing you can do to build strong personal credit. Continue to keep an eye on your credit report to make sure your score is rising as a result. It may take a few months to see a change, so be patient and plan ahead.

3. Plan Your Business Financing

As you’re working on your credit, consider how you will fund your new business. Do you have money in savings? Many entrepreneurs don’t. Will you need to take out a loan? If so, explore specific loan types for your needs.

For example, if you plan to open a freight hauling company, you might look at freight factoring as a way to convert your accounts receivable to cash. If you want to open a bakery and will need a large commercial mixer, you might qualify for an SBA CDC/504 equipment loan.

There are a variety of financing options out there for every type of business and credit, so explore them before you need them so you know what you qualify for.

4. Have a Backup Plan

A good credit profile won’t guarantee you’ll get a small business loan, but If you start your business with weak credit, your financing options will be limited. You will still have options, but you should expect them to come at a premium. Merchant cash advances (MCA), for example, provide you with capital quickly if your business accepts credit cards, and you don’t need great credit to qualify, but they can be expensive compared to other options.

An MCA often has much higher interest rates than other financing tools, so have a plan for paying back the money quickly so you don’t lose too much of your profit to high interest rates.

The more effort you put into planning your financial strategy for your business before you start it, the better you’ll be set up to take advantage of affordable financing tools which will, in turn, open the door to many opportunities to rapidly grow your new business.