Do You Need Good Credit to Purchase a Franchise?

Posted by FranSave on March 9, 2023

If there are two business subjects that are conspicuous by their absence in many public school curriculums, they are a) how credit works and b) the methods of entering the business world. Just because you might not have learned about these topics between health and gym class doesn’t mean you need to be uninformed about them. For many who are looking to get a foot in the door of the business world, these are important topics with many questions. When it comes to franchising, these are key topics, too. Those considering franchising will often wonder if they can purchase a franchise with either a low FICO credit score or a lack of credit history. Let’s address these questions. 

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The Purpose & Function of a Credit Score 

You might have heard terms such as “good credit” and “bad credit” before. But, you might not be aware of what exactly they mean. Your FICO score is what lenders look at when determining whether you’re a good risk to lend money to. There are a variety of factors that establish your FICO score, such as credit history, balances on credit cards, and whether or not you have any outstanding debts in your name. FICO scores range from 350 to 800 and higher, where the higher the number the stronger your score and the less risk you represent to a lender: 

300 - 580: Poor 

580 - 669: Fair 

670 - 739: Good 

740 - 799: Very Good 

800 - Above: Excellent 

Paying attention to the peaks and valleys that accompany your credit score is a good way to track how well you’re handling fiscal responsibility. 

What to Look at With Good Credit 

If you have a good credit rating, you have more options available to you in terms of franchises. For instance, you have the option to look at franchises that have a low acceptance rate. These are considered the “Ivy League” of the business world due to their strict requirements for ownership. If your rating is above the range of 720, you might be able to qualify for a loan from the Small Business Administration that comes with a minimal interest rate. 

Options Available to Low Credit Ratings 

If you have a low credit score or a lack of credit history, there are still options available to you. Some of the industries in which many consumers with low credit enter include eCommerce, vending, home repair, and educational assistance. Some people pursue microloans from the Small Business Administration that can cover the cost of a franchise up to $50,000. There may also be opportunities to establish a business line of credit, which is smaller than a traditional loan but can help get you started with the basics for what you need. 

Your Opportunity Awaits…

If you are unsure of whether your financial picture aligns with a franchise, reach out to FranSave. We can help you find answers and opportunities. At FranSave, we can help you realize your full potential and unlock the door to success. For more information, visit us at

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This information is not intended as an offer to sell, or the solicitation of an offer to buy, a franchise. It is for information purposes only. Currently, the following states regulate the offer and sale of franchises: California, Hawaii, Illinois, Indiana, Maryland, Michigan, Minnesota, New York, North Dakota, Rhode Island, South Dakota, Virginia, Washington, and Wisconsin. If you are a resident of one of these states, we will not offer you a franchise unless and until we have complied with applicable pre-sale registration and disclosure requirements in your jurisdiction. Franchise offerings are made by Franchise Disclosure Document only.

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