In this article you will know what is credit scorewhy you should increase it and how to do it.
Why have I been denied a loan for my business?
If you are asking yourself this question it is because two things are happening.
- The economy of your company is not as good as it should be.
- Your credit score is not adequate to approve the operation.
In this article we are going to show you precisely how to increase your credit score fast; something key for the granting of a loan.
You’re about to find out why it’s so important to do so. But first, let’s start with the basics.
What is the credit score?
The credit score is used to know the possibilities that exist that you pay a credit in the established time. And to create a report of this type, a series of aspects of your financial history are taken into account.
Financial institutions use a mathematical formula to develop the credit score; taking into account certain data about your business. These are some criteria that it takes into account:
- The debts you have at this time.
- How have you paid your bills?
- The credit accounts you have open.
- The amount you have used of your credit.
- If any of your debts have been resolved judicially.
- If you have had a bankruptcy and when it happened.
From this information, the companies obtain your credit score; which used to know if they should grant a loan to your company. In addition, it is a fact that will be taken into account to determine the amount granted, the interest rate and the term to pay the debt.
You should bear in mind that although the information we have discussed is usually considered, each bank, institution or lender decides what aspects it takes into account when determining whether to give you a loan.
What is certain is that they will always be related to your financial situation and the way in which you deal with your credits.
If the score is high, obtaining a loan with a good interest rate and a long term is guaranteed. But the lower it is, the more complicated things will get.
However, all is not lost. You can improve your score. Here we tell you how to do it.
How to increase your score quickly?
There are different ways to increase your credit score fast. Do not worry, because in most cases it will not be too complicated. In addition, your company will once again be attractive to credit institutions.
Pay your bills on time.
Your credit score is greatly affected by not only having defaults; but also not paying on time.
One of the worst things that can happen is that your debt ends up in a collection agency. So, always pay your bills on time.
Credit history.
A recent credit history is not a good sign. True, here you will need time to figure it out. But it is good advice that as soon as you open your company you establish a line of credit.
Borrowing limit.
Try not to go above 30% of your borrowing limit.
Don’t ask for too many loans
Applying for too many credits can affect your credit score.
Don’t wait any longer, start working on your credit score.
Do you need a loan for your company? Do you have to improve your credit score?
Get down to work and in a short time you will have that money that will make your business grow. Do not forget that a quick credit can be the financial solution that marks the beginning of the growth of your company.
And you, what would you use the money obtained for?
And remember, if you are really interested in creating your own business, you can read our book “How to create a company while working: Discover how to manage your time, manage your money and motivate yourself while creating a company and working for another” , where you will find all the information you need to found your own company, without having to leave your job.
