Will asking about business funding hurt my credit score?

No. Telling Ask Sterling about your business doesn't touch your credit file, because Ask Sterling never runs a credit search. If our funding partner or a funder needs to check your credit later, they'll tell you first, and even then a single hard inquiry is a small, temporary dent.

The two kinds of credit check

The Consumer Financial Protection Bureau splits credit checks into two kinds.

• Soft inquiries include checking your own report or some pre-screening. The CFPB says these "will not affect your credit scores."
• Hard inquiries happen when you apply for credit and a lender pulls your report to decide. These can lower your score, "because most credit scoring models look at how recently and how frequently you apply for credit."

For a business owner, the check is usually on your personal credit, because the funder wants to know how the person behind the business handles credit.

How much a hard inquiry costs you

Less than most people fear. FICO says: "For most people, one additional credit inquiry will take less than five points off their FICO Scores." Hard inquiries stay on your report for up to two years, but FICO says they only affect FICO Scores for a year.

FICO Scores run from 300 to 850, so a few points is a small move. The bigger risk is volume. Five or six applications in a fortnight tells every funder that you've been turned down or are taking whatever you can get.

Sterling's take: one careful application beats six hopeful ones, for your score and for the offers you get.

What happens after you ask

1. You answer a few questions about the business. No credit search happens at this stage.
2. With your consent, your enquiry goes to one funding partner only: Abbey Road Capital / SOJA Ventures.
3. A funding specialist reviews it. Before any credit check, they'll tell you what they are checking and why.
4. With your permission, they may share the enquiry with funders they work with, who may run their own check.

You stay in control of each step. If you aren't ready for a hard inquiry, say so before you give permission.

How to protect your score while you shop

• Pull your own reports first. That is a soft inquiry and shows you what a funder will see.
• Fix errors before you apply, not after a decline.
• Ask each funder whether its check is soft or hard before you hand over your Social Security number.
• Keep formal applications to the ones you would actually accept.
• If you're borderline on credit, read what credit score do I need before you apply anywhere.

What to do next

If you're comparing options, start with the cost, not the application. Get the numbers on any offer you already hold into the offer checker, and read who you'll speak to so you know who will see your details and when.