By: Katherina Gorospe
Your credit score reflects how well (or not so well) you handle your money. Unfortunately, it will always be one of those factors that banks look at closely when it comes to determining your loan eligibility. If approved, it also affects your rate. While it is a mutual factor with lenders, it expedites the funding process.
When it comes to your business, obtaining a loan might be difficult, especially if the time in business is on the shorter end. However, there are steps that you can take to make the process easier, in order to get the funds you need in a timely manner. Let’s say the funding you are applying for is based off your personal credit score. While it’s not recommended to mix business credit with your personal credit history (one is known to lower the other, respectively), your current score could gain access to the loan you seek, depending on where you’re applying. Your personal credit score gives lenders an idea of how well you’ve been able to pay off various debts, and how well you’ll be able to handle this next loan.
While personal FICO scores go from 300 to 850, a business credit score can range from 0 to 100. When checking your credit report, you’re going to have to answer various questions involving information like: your time in business, lines of credit you’ve recently applied for, your annual payment history, and more. Like always, double check your reports to make sure no errors were made. It’s not rare to see incorrect listings, but fixing it should be no problem if you provide documentation. Most banks draw a harsh line when it comes to what credit score is required, but lending institutions remain flexible.
As a business owner, your credit can also build off the work you do today. Check with the suppliers and vendors you work with to see if they report your invoices back to your credit agency. Doing so could certainly improve your credit score, because your vendors are one of the resources where the bureau obtains your data.
If you’ve established some sort of credit, you’re used to keeping track of your payments and trying your best to submit them on time or early. It’s no different with your business credit, as it’s also beneficial to limit yourself to less than half of your spending limit. This also gives you some wiggle room in case unexpected or forgotten costs arise.
Before you decide where to apply for a loan, do your research and take note of the lender’s qualifications. This can range from your revenue, personal credit history, mortgage and more. Stay up-to-date with what your preferred lender looks for because you might be surprised.
The bottom line: there’s more to receiving funding than you think and your eligibility rests on multiple factors. While the bank may be tricky and time-consuming, we provide you with a fast application process to get your business the proper funding.