There are options if you’re seeking business loans for bad credit, don’t give up your dreams!
When seeking funding for business reasons, your credit score is the first determining factor used to assess your worthiness for low interest rates. If your credit score is extremely low lenders consider you to be risky, therefore you are charged higher interest rates to compensate lenders for the risk they are taking by engaging in business with you. By improving your credit score, you decrease the perception of risk associated with lending to you and subsequently receive lower interest rates on loans and credit cards. Here’s a few ways you can improve your credit score, so looking for business loans for bad credit doesn’t have to be your only option.
Dispute incorrect information
Often information reported on your credit report is inaccurate. As a consumer, you have the right to dispute all incorrect information found on your credit report. The dispute process has very specific parameters and processes so be sure to educate yourself on how it works. If the process seems overwhelming to you, partner with a local credit repair company. Be sure to check reviews and confirm that the company is legitimate and trustworthy.
Protect your identity
It is also worthwhile to subscribe to identity protection services, because identity theft is extremely easy to prevent, but extremely difficult to undo once it has occurred. If you are a victim of identity theft don’t hesitate to contact the three credit bureaus as soon as you recognize that your information has been compromised and dispute all the charges and transactions that were not authorized by you.
Pay down your credit cards
If you have a current credit card and your balance is higher than 30% of your limit, pay down your balance as soon as you can. Carrying high balances will directly impact your credit score. Utilization is a huge factor in determining your credit score, as it tells lenders that you’re disciplined enough to manage your credit limit without constantly overspending.
Increase your income
When applying for funding whether it be personal or business reasons, your income is taken into consideration in the approval process. The debt-to-income ratio is calculated by lenders and used to compare how much you owe to how much you make. By increasing your income, your debt-to-income ratio becomes more favorable in the eyes of lenders which can help you gain access to capital. As a business owner, one of the best ways to increase your income is to introduce consumer finance programs as payment options, so that you can turn away less customers and make more revenue.
Pay on time, every time!
If you are seeking business loans for bad credit, you may only qualify for high interest loans or credit cards. Treat these loans as if they are one of your most important bills. Pay each month on time and even consider paying more than the amount due. If you build solid credit history with lenders who charge high interest rates the chances of you being approved for lower interest credit increases.
Improving your credit isn’t a quick or easy process, it takes time and disciple but if you are committed to seeing yourself with a higher credit score you can realize this goal. We can help, contact us today to learn more.