Obtaining the necessary financing for your business startup requires one key ingredient – a good credit score. While there are plenty of products out there for business owners with bad credit, the opportunities are far and few in between, and can cost you a great deal of money in interest rates alone. Before you start filling out applications to receive funding, you have to ask yourself one very important question: “When lenders look at my credit report, what is it they see?”
Poor Money Management Skills
One of the first and most obvious things that a bad credit score says about an individual is that they have poor money management skills. A person who cannot pay their bills in a timely fashion obviously does not know how to create a budget and put money aside to meet their financial obligations. It tells lenders that if they were to give you even $1,000, that the chances of you doing the right thing with that borrowed money is slim to none.
Over Extender of Credit Capacity
The amount of credit you use is also very important to lenders. A personal who knows their income limits and what they can manage as far as credit goes, will have a low debt to income ratio and low balances on their credit accounts. Someone with bad credit and maxed out credit cards is essentially telling lenders that they’re going to use every bit of the loan funds provided and probably never have the ability to repay it in a timely fashion.
Pure Inability to Handle Financial Obligations
It is common in this economy to fall short financially. Lenders are open to understanding this as well. However, when a credit history shows that you’ve had an account for 10 years and only paid on time for 1 of those years, it shows lenders that you really can’t handle that responsibility. Missed payments, collection accounts, and limited income can easily show that while you may have the financial means to cover the lines of credit, you’re simply not being responsible enough to handle them accordingly.
Time to Clean Up Your Reputation
A business owner who cannot manage money, overextends themselves, and lacks the ability to handle financial obligations is not only someone you don’t want to allow to borrow funds, but it’s someone you don’t want to do business with either…
It is safe to assume that if your credit history is filled with a bunch of delinquencies, collection accounts, and charge offs; lending providers are not going to be too willing to work with you in obtaining a line of credit for your business. The good news is that there are some steps you can take on your own and with the help of financial service providers to boost your credit score and improve your reputation as a business owner.
· Review most current credit report
· Contact creditors about payment arrangements
· Remove inaccuracies or fraudulent accounts
Make Payment Arrangements and Stick to Them
Contact creditors and set up new payment arrangements that fit your personal budget. Be sure that the arrangements that you set are ones that you can afford to make on time. The only thing worse than someone who doesn’t pay their bills on time, is someone who gets a break from their account holders and still doesn’t pay on time.
Clean Up the Negative Stuff
Anything on your report that is marked inaccurately or not legally an account you opened should be automatically removed or corrected on your credit report. Consumer opinions are great if you’re going to utilize a law firm for credit repair services. Check online for Lexington Law reviews for credit repair services to help you in removing those negative marks on your credit report.
Once you’ve gotten your personal finances in order and your credit score has improved, you will notice a huge difference in the lending opportunities available. You’ll also have peace of mind in knowing that your reputation as a business owner is rock solid.