There can be nothing more delightful than starting your business. However, one of the major hurdles that many people face when starting a business is financing the venture. Apart from selecting the type of loan that is easy on pocket and meets your need, you may also face a major hurdle- having the right credit score. A good credit score is the gateway to not only get the business loan approved but also get a lower rate of interest on the loans. If you are not aware of the important factors related to your credit score, we are here to help you out. The blog discusses some important points about your credit score.
How is your credit score calculated?
You credit score is calculated with the help of your credit report. The credit report is prepared after collecting the data and information submitted by various banks and other financial institutions. However, remember that the credit report is not your credit rating. The credit report mainly shows your credit history in order to assess your eligibility to get a loan for your business.
What does your Credit Report contain?
Your credit report contains all the necessary information that is required to determine your eligibility to get a loan. The credit report mainly consists of the following information:
• Name of the Company
• Nature of your Business
• Number of credit facilities you have
• Number of loans taken in the name of the company
• Guaranteed credit facilities
• Number of inquiries, if any, made in the name of the company
What is the Ideal Credit Score?
Banks providing business loans look into your credit score to determine your eligibility to repay the loan that you have applied. As a result, the higher your credit, the better are the chances of loan approval. However, what should be the ideal credit score to get a loan without any hassles? Anyone with a credit score between 750 and 900 is considered the right candidate for getting loans. However, a score less than 750 will make it difficult for you to get a loan.
What Factors Do Lenders Check in your Credit Report?
The lenders get your credit report before approving the business loans for a number of reasons. The lenders check your repayment capacity, profit margin, receivables turnover, liquidity, collateral assets and capital available before making the final decision.
Those were some of the essential details that you need to know about your credit score and report. Collecting the information on a regular basis ensure that you take the right steps to improve your credit score to avoid hassles in future.