Have you ever sought for financing desperately because your startup needed a boost? Are you worried that you currently have an uncleared debt and therefore not sure whether you will receive the funding for it or not? If this situation describes your current financial mystery, then this article is an excellent insight into your solution. Having a high credit score gives you an upper hand for a successful funds borrowing. However, this takes time, commitment and being responsible for all your financial actions. That includes paying back any borrowed funds within the agreed credit period.
What does a credit score entail?
Building a good history of your past financial dealings will improve your credit score for the best. A credit score is merely the financial details found in your file of your loan repayment history which help financiers assess your ability of repaying in case they decide to fund your startup and the amount of interest they will charge you.
Having instances of failing to pay money borrowed in the past will impact negatively on your ability to get a loan. Potential lending institutions may end up charging you high interests because they believe that giving credit is taking a risk. No single business owner envisions paying a loan with the highest interest. A wise move for a startup loan would be to choose one which has the least accruing interest.
A lot of research has been done by sources such as Forbes regarding why 90% of startups fail. Here’s a survey on what to do to make sure yours is among the 10%. As such, it’s important that you ensure your financial record is up to par for successful funding for your startup.
Below are helpful tips to help you build your credit score for easy access to business financing.
• Practice timely payment of your bills.
Paying your utility bills on time helps to boost confidence in the lender that you take responsibilities seriously. Some of these bills include phone calls, electricity, and internet service expenses. Such information helps in building your score and instill more trust with the lenders.
• Beware of the performance of your linked accounts
If you possess an account in partnership with a friend, it’s important to be aware of the activities and status of that specific account. Keep in mind that your credit score is an analysis of all the financial activities you relate with. Having a poor history with any account you connect with whether it’s for your spouse affects your credit score negatively. There are credit builder loans which are beneficial. Here, you can build up your credit score with these loans. Ensure that the respective account is active with adequate balances and doesn’t have incidences of unpaid debt or speculative dealings.
• Be on the lookout for any fraudulent activities
Be in touch with your account status including all the transactions that take place in it. Report any dangerous activities that may have happened to your account without your knowledge with your banking provider. In case of any suspected fraudulent activities, you should inform the credit reference bodies.
• Frequent change of residence
It gives the lender more confidence to deal with you if you have a permanent home or have lived for long in a particular address. Remember while applying for a loan, all your financial reports need to create an excellent stability impression to the lender compared to frequent relocation history which could raise eyebrows.
• Study your credit file thoroughly to rectify any errors
Ensure that the details you put on your record are all correct before the final submission. A simple mistake such as the wrong contact information will profoundly impact on your file. You need the financing, therefore be as accurate as possible.
• Maintaining a low credit card balance
Strive to reduce all your current debts as much as possible as they will determine what you will receive as a loan. Having a huge credit balance interferes with the trust of your lender on your ability to pay back. Always strive to pay off your mortgage on time and at the very least let you credit balance be at its lowest.
Getting funding for your startup through loans is not an easy task as the sound of it. You will have to do more than just walking in a lending institution and filing papers for a loan application. You have to provide proof that you are financially responsible and can be trusted by the lender. The opportunities for getting funding are limitless as long as your credit score is good.