While looking to avail small business finance, your credit score becomes an important factor. This is because your credit score is a measure of your ability to repay the loan, and plays a major role in the loan approval process. The higher your credit score, the better your chances of loan approval.
Therefore, if your credit score is poor, you will need to improve it, before applying for a loan.
Here are a few quick ways to increase your credit score, to secure a small business loan:
● Check Your Credit Report
Get a copy of your credit report, (it’s easily available online) and check for errors. The report contains all the data based on which your credit score is calculated. So, it’s vital that the amounts are accurate. Check for any late payments that may have been incorrectly listed for any account, and also the amounts owed for each of your open accounts. If there are any errors, contest them and get them corrected.
● Open A Business Credit Card
Owning a business credit card is a great way to improve your credit score. Simply open a new credit line for your business, and make all necessary purchases for it through the card even if you have the cash to pay for it. Then, pay off the debt in full with cash, within the time period, to improve your credit score. Doing this for a few months continuously, will improve your credit score and creditworthiness significantly by establishing a record of timely payments.
● Set Up Payment Reminders And Pay Online
Paying your bills on time is one of the easiest and quickest ways to improve your credit score. Set up payment reminders on your phone, or mail and pay your bills on time. Most banks and creditors also offer payment reminders via SMS and email. You can also set up automatic payments via credit card or your business bank account. However, make sure to not go into overdraft, as this would defeat the purpose.
● Do Not Close Old Accounts Even If You Open New Ones
Older paid accounts give you a longer and better credit history, since it proves that you are capable of paying off your debt on time, and that you have been doing so for a long time. Therefore, leaving your older paid accounts on your credit report improves your history and in turn your score. Moreover, opening new credit accounts will also add to your overall credit limit. That, in turn, reduces your credit utilization ratio and improves your credit score.
Taking these steps improves your chances of getting approved for a loan. You can approach banks or NBFCs like Bajaj Finserv for business loans and financial assistance. Bajaj Finserv Business Loans, in particular, offer many great features like a flexi loan facility, quick approval, online management, pre-approved offers, etc. All you have to do is check your eligibility and apply online!
Nidhi Mahajan is a guest blogger and passionate about content writing. She has been creating SEO friendly content for more than 5 years. For more info you can check her Blogs at pop-pins.com