The FINANCIAL - How to Improve Your Credit Score to Secure a Small Business Loan

How to Improve Your Credit Score to Secure a Small Business Loan

How to Improve Your Credit Score to Secure a Small Business Loan

The Small Business Administration is a government agency that offers loans to small business owners. When you apply for a loan, the SBA will guarantee it. This encourages lenders to work with business owners who don't have perfect credit because the SBA promises that it will pay for the loan if the borrower defaults. You also have the option of going through your bank or credit union to secure a loan. Lenders will always look at your credit history though, which is why you need to know how to quickly improve your score to secure the loan to get your startup dreams off the ground.

Sign Up with a Reporting Agency

Credit reporting agencies are organizations that report your credit and make note of any late and on-time payments that you make. This allows you to improve your credit with the bills that you regularly pay. Most utility bills only have a negative impact if you make multiple late payments or owe money on an account that the provider closed. Credit reporting agencies notify the bureaus every time you make a payment on your cable, water, gas and power bills. You should see a significant improvement in just a few months.

File Disputes

The federal government allows individuals to request a free credit report once a year. When you find a mistake or error, you can file a dispute to remove any erroneous information. The lender will then have to prove that the debt belongs to you. After a lengthy dispute period it’s possible the misinformation will be removed your report, though it may take months to catch up to the bureaus.

Refinance Your Student Loans

As the cost of going to college keeps rising, more money than ever is spent on degrees. It can easily cost $10,000 a year at a public college to more than $30,000 at a private university. Don't let your student loans keep you from securing the financing that you need to get your business off the ground. By looking to refinance student loans, you can work with the lender on bringing monthly obligations down to a manageable payment and reduce your overall debt-to-income ratio. On-time payments and continuous reduction of principal balance month over month will continue to drive up your credit score.

Look for Collections and Judgments

When you owe money, the lender can file a report against you and even take you to court. A collections notice that comes from a debt collector may offer you the chance to pay off your debt for less than you owe. If you ignore the notice, the lender can file a lawsuit and earn the right to place a lien on your bank account. To quickly improve your score, pay off any collections that appear on your report, which can include old utility bills and hospital bills. Collections and judgments stay on your report for years and can make securing a loan difficult. Paying what you owe and taking care of other issues can help you get a small business loan and quickly improve your score.

Author: The FINANCIAL