Applying For A Business Loan - Good Credit Is A Must

Is good credit really important when applying for a loan

? Indeed it is. In fact, a lenders decision whether or not to approve your loan applicant may greatly depend on your credit standing. This proves to be true regardless of what type of loan you are seeking- be it for personal or business purposes.

For new businesses and start-up businesses with no credit history, the personal credit history of the business owner will be a huge factor. Needless to say, lenders are looking for assurance that the borrower will be able to keep up with the loan repayment. True enough, having bad credit or even a low credit score may cause your business loan application to be declined.

What can you do? Its important to prepare before submitting your application to a small business loan lender. Its a good idea to check your credit at least six months before applying for a loan. This way, you will have the chance to work on improvement in case your credit score is not exactly in good shape. The higher you can raise your credit score, the greater your chances are of getting an approval.

On the other hand, if you are managing an established business and you already have business credit, you should also make sure that your business credit is in excellent standing. A higher Paydex score will not enable you to get quick approval with your business loan, it will strengthen your negotiating power as well. You should take advantage of your impressive business credit score to reduce the interest rate of your loan or to enjoy more flexible repayment terms.

Check your business credit report a few months before applying for a business loan. See to it that all your accounts are in order. Make sure that your current creditors are reporting your payments to the business credit trackers accordingly. If you discover that one of your creditors is not reporting your payments, contact this creditor and request to have your payments reported.

by: Irish Taylor

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