How to Transition to Unsecured Loans for your Business
If you have bad credit and struggle with qualifying for business loans, you may have used secured loans and secured lines of credit as a tool for building your credit. Learn how to transition out of secured borrowing and into the world of unsecured loans.
Check your Credit
In order to transition to unsecured loans, it is important to know where you stand. Checking your credit report is the only way to understand why you are unable to qualify for certain unsecured loans. There are several websites that offer free credit reports. Be sure you are reviewing your FICO score from the three credit bureaus, because this is the score that most lenders use to evaluate your credit. Once you are aware of your score, set a reasonable goal for what you want your score to be, and when you desire to see the change. Then make financial decisions each day with this goal in mind. This level of discipline will help you improve your score and help you qualify for unsecured loans.
Dispute Incorrect Information
You have the right to dispute information on your credit report that is incorrect, by writing a dispute letter to the creditor. By law, creditors have a specific amount time frame to acknowledge your letter, and if no acknowledgement is received, you have the right to request the incorrect information be removed and that your credit report be updated with the three bureaus.Writing dispute letters can be tricky, so be sure to do your research and find a good template that aligns with your situation. Send letters certified and keep proof of sender receipts as back up.
Consolidate Student Loans
Unpaid student loans have the huge impact on your credit score and can hinder you from qualifying for unsecured loans. There is no way around paying your students loans, even if you take part of the Student Loan Forgiveness programs, you will required to make a certain number of on time payments before become eligible for these programs. Consolidation of your student debt is a great option for improving your credit because it wipes out late past payments on the original loans and creates one current loan. If you make on-time payments after consolidating your loans, you will see a major improvement in your credit score.
Pay On Time
Paying your bills on time will keep your credit score from sinking any lower. If you want to qualify for unsecured loans, you first must prove you can manage the debt you have. Organize and prioritize on time bill payment and if you can’t make a timely payment be sure to communicate with lenders and find out what happens if you pay late.
Protect your Credit
Good credit is hard to get, and bad credit is hard to recover from. If you want to transition to unsecured loans, you must protect your credit. Don’t cosign on debt for others if they don’t have ideal credit. Don’t offer your personal data to strangers. If you choose to use a credit repair service, ensure it is run in a professional manner. Your credit score is sacred, start treating it as such today!