An SME loannot only funds a business, but also fulfils an aspiration.
With the credit market booming in all possible ways, the only thing that can stop an entrepreneur from receiving business funding is a bad credit score.
Your credit history dictates your eligibility of acquiring a loan. Bad credit history is most often caused by factors such as late payments, debt collections, foreclosure, tax liens or bankruptcy showing up on your credit report.
It is important to understand how to repair thedamages made if you wish you apply for business funding in the future. Begin with checking your credit score so that you can gauge where you stand and accordingly decide what parts of your score need to be improved or repaired.
This is where learning abouthard credit enquiries and soft credit enquiries comes in.
Soft enquiries, the kind you make to check on how things are, do not factor in to your credit score calculation in any way.
Hard inquiries, on the other hand, take up to 5 points off your score. Each loan application can result in a subtraction from your credit score, making you look desperate to borrow money, putting you at a credit risk. While one hard inquiry may knock a few points off your scores, multiple inquiries, in a short amount of time, may cause more damage.
After you have understood how you can check your credit score, follow the credit repair steps given below to gain access to an SME loan.
#1 Restrict Your Credit Usage
The most effective way to repair your credit score is by paying down yourrevolving credit and keeping your credit utilization below 30%.
Come up with a payment plan that allows you to pay off the highest interest cards first, while maintaining minimum payments on your other accounts.
#2 Maintain Your Personal Credit Score
No matter what your purpose of borrowing is, all business funding lenders take your personal credit score into account while evaluating your business.
Thus, analyse and maintain your personal credit scoreon all costs.
#3 Scrutinize Your Credit Score Frequently
Reviewing your credit report periodically will help you make sure it is in good shape, avoid inaccuracies and enable you to monitor your progress,especially if you are recovering from a bad credit score.
Tomonitor your credit score regularly, use any of the free servicesavailable online. Also, your bank may offer a credit monitoring service that provides free updates, so check with your bank or credit card issuer for such a facility.
You credit score does play a determining role in growing your business and ensuring its success. Thus, it is always a good idea to check and repair your bad credit to improve your chances of getting finances to support your business.
