A credit score shows the credit payment statuses over time, with more emphasis on latest records. If you are looking to boost your small business credit score, it will not happen immediately. Credit score take into account years of previous behavior you can find on your credit report, and not just your current activities. However there are a few steps you can take to improve your credit score.
What Is Credit Score?
Your small business credit score is a three-digit number generated by using your information on your credit report. It’s designed to calculate the risk, mainly, the possibility that you will become delinquent for your credit obligations in the 24 months after scoring.
What’s a Good Credit Score?
While every lender has his own requirements for assessing credit score. However, generally on a scale of 300 to 850, 700 and higher credit score is commonly taken into consideration as good credit score. Lenders normally use your credit score to help them decide if they will approve you for a loan or not. Generally, the higher your credit score, the better your possibilities of getting approved. Having an excellent credit score can also help you save on interest rates.
Undeniably, a specific credit score doesn’t guarantee that you will be approved for funding or get the lowest interest rates, however knowing your credit score can help you determine which offers to apply for – or which areas you need to work on before you apply for small business loan.
What Is Bad Credit Score?
Bad credit score usually defines a report of previous repayment failures to keep up with payments on your credit score agreements, ensuing in the failure to get approved for new loan. It normally means you haven’t paid the loan or other financial obligations on time. Your public record history is also on your credit report, which include tax liens, legal judgments, and bankruptcies against you.
How to Check Credit Score?
You can check your small business credit score with three major credit reference agencies – Experian, Equifax and TransUnion. Due to the fact you have a legal right to see what information credit reference agencies hold, you can get your first copy of credit score without spending a dime.
Your credit score is an online footprint of your financials. It’s a guide used by lenders and banks to determine how likely you’re to pay back loans and other credit card balances. The better your credit score is, the lower the credit risk and hopefully the more likely you’re to be accepted for a business loan.
What Information Is In A Credit Report?
Even though every credit reporting agency’s format for credit report is different, but all credit reports comprises basically the same information, which includes identifying information, trade lines, credit inquiries and public record and collections.
How to Improve Credit Score?
If you are experiencing with low credit score, there are many other things you can do to improve your small business credit score:
- Register on electoral roll: if your name’s not on the electoral roll, you’ll find it quite difficult to get funding.
- Check for Any Glitches on Credit File: Even having only a wrong street address in your residential address can have a serious impact on your credit score. Therefore, you need to make sure that you take a look at all of the details mentioned on the credit report and document any wrong detail without delay.
- Pay Your Bills Timely: Paying bills on time can also help you in improving your credit score. It shows that you are capable of managing your finances.
- Check if You Are Linked to Another Person: If you have a joint account, it is advised that it should not be linked with someone who have bad credit issues. If it is, it could affect your personal credit score as well.
- Take a Look at Your Report for Fraudulent Activity: If something on your credit score report is inappropriate or doesn’t apply to you, for instance, if someone applied for funding in your name without taking it into your knowledge, contact the credit reference agencies immediately to have your credit report file updated.
- County Court Judgments or CCJs: Having court judgments for debt will damage your credit rating. If you’re experiencing problems in keeping up with your payments, get some debt advice.
- Pay Before Asking More: Preferably you must remove any outstanding debt on your account before applying for new loan. Lenders might be doubtful in lending you more if you previously have existing debt.
- Constantly Relocating: Lenders feel relaxed if they see residential proof. If you are constantly relocating home, update your address as well.
In case you are struggling to improve your small business credit score, it is probably well worth considering signing up to a one month free membership offered by main credit agencies.