Having a poor credit score is a major reason you may be denied access to any of the best small business loans. The dependence on this criterion has grown since the pandemic, especially because many small businesses are struggling to survive. So financial institutions are concerned about your capacity to pay back the loan as at when due.
But what happens when you’ve got a pretty poor credit score? You may try out fintech lenders, such as Camino Financial, that offer loans at relatively fairer credit score requirements. However, that doesn’t mean you should run your business without being creditworthy. Before we delve into how to boost your credit score, let’s discuss in detail why you need a high credit score.
Why Would You Want A High Credit Score?
High credit scores are great to have, but most small business owners may not know why it’s important to have. Here are some reasons to take your credit scores more seriously if you haven’t been doing so:
Qualifying For A Loan Is Easier
Whether they’re banks or fintech, lenders are generally hesitant in lending money to small businesses with poor credit scores. Getting the best small business loans is a lot easier with a high credit score. What’s more, you get better loan terms once you can prove your creditworthiness.
Access To The Cash You Need For Expansion
You might say your business is fine without the need to borrow. But what happens when you need to expand and grow your small business? How do you get financing, and how do you hope to achieve that? Even if you opt for private investors, the question of your credit score will pop up. Well, with a high credit score, expanding your small business with new equipment, inventory, and facilities becomes much easier.
Your Personal Finance Is Protected
A high credit score that allows you access to business credits can help you separate your business from personal financial responsibility. Company debts will be reported on your business’ credit reports.
Here’s How You Can Increase Your Credit Score To Get The Best Small Business Loans Faster
A bulk of your credit score will depend on what your credit report says. Now you know how beneficial it is to get and maintain a high credit score, here’s how you can bring it up faster to secure amazing small business loans:
You Need To Review Your Credit Reports
The first step towards increasing your credit score faster is reviewing your credit reports. This is how you know the factors mitigating or aggravating your credit score situation. Here are some factors that may get you a higher credit score:
- Low balances on your credit cards
- Old credit accounts
- History of prompt payments
- Credit card and loan accounts
- Low inquiries about new credit
High credit card balances, missed payments, judgments, and collections can ruin your credit score as well.
Set Payment Reminders
Payment reminders are also a great way to increase your credit score faster. You should consider writing down payment deadlines for every bill. Planners and calendars are the best places to put this down on as well as online reminders. When you consistently pay your bills before deadlines, your credit score will rise faster.
Take Care Of Past-Due Accounts
Being behind on bills will put a dent in your credit score but catching up can help improve it greatly. A late payment can stay on your credit report for as much as seven years! But if you strive to keep your accounts current, your scores will improve tremendously.
Keep A Low Balance On Your Credit Cards
Balances on your credit cards that are near or above the limit will affect your credit score negatively. For best results, keep the balances below or at exactly 10 percent on every line of credit.
Apply For Credit Only When You Need It
Work towards applying for new credit sparingly. There’s a danger of applying for credit just to boost available credit. However, if you open many credit accounts within a short time frame, you can reduce your credit score.
Your credit score is a crucial measure of the financial health of your business. A high credit score is a window to low-interest rates when you need loans to keep your business running. However, sometimes it becomes hard to get the best small business loans because of your poor credit score. Don’t fret; you may still secure that long-desired loan by contacting fintech companies like Camino Financial that are passionate about helping small businesses succeed.
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