Your FICO scores can seriously aid or harm your ability to borrow money for your business.
Banks base their decision solely on your FICO score, so if you have bad credit, you will probably be looking at a denial. You may spend sleepless nights worrying about your credit score, because you’ve had past or present financial issues. Your score has taken the hit, but this doesn’t mean you’re out of the running, you can obtain a business loan with bad credit. There is also hope for improving your score and here are the 5 simple steps.
Get a copy of your credit report.
You can’t begin to fix your credit if you don’t know where the problem lies. The first step is to get a copy of your credit report and score straight from the consumer reporting agencies. Experian, Transunion and Equifax are the three bureaus that monitor credit. Checking your own credit is called a soft pull, which will not impact your score negatively.
Look for problems in the report.
It is likely that your report will contain errors. The mistakes can be an indication of identity theft and should be disputed so that your score can accurately reflect your information. Correcting errors through the dispute process is simple. But it’s important to be patient, this process can be lengthy and your score will not jump up instantly.
Don’t over use credit.
Credit cards are usually the culprit for a low score. If you have abused your credit cards, don’t rush to close them, as this will make your score worse. Balance your usage and pay down your credit cards so you don’t have a high usage percentage.
Pay on time.
It may seem simple, but it’s definitely worth mentioning. Making on time payments will surely help your credit score. Communicate with lenders if you are unable to make your minimum payment. Pay one month in advance to give yourself an automatic rainy day fund.
Always monitor.
Credit maintenance takes constant monitoring. Sign up for alerts so you are always in the loop about what is happening on your report. In the event that inaccurate items are reported or you become a victim of identity theft, reach out directly to the credit bureaus to begin the dispute and resolution process.
While loan officers at traditional banks are often handcuffed with stringent credit requirements, not all lenders are limited by these same restrictions. Different lenders, as well as different types of financing, will expect different minimum credit scores. Some types of financing won’t even check your credit score at all. So if you need a business loan with bad credit, our team at Financing Your Way can help. Give us a call and we can talk through immediate financing options, as well as steps to help improve your credit over the long term.