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6 Easy ways to keep your Credit Score Eligible for Business Loans

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Title: 6 Easy ways to keep your Credit Score Eligible for Business Loans


1
6 Easy ways to keep your Credit Score Eligible
for Business Loans
2
  • As a small business owner in India, you probably
    know that keeping a sound credit score is
    integral for securing a business loan. This is
    because it tells the lender how trustworthy you
    are. A high credit score indicates that you pose
    minimal risk to the lender. So, getting a
    business loan approval would be a breeze,
    provided you meet the other standard requirements
    of the lender such as annual revenue and
    overall business experience.
  • A low credit score, on the other hand, will make
    it very difficult to get an unsecured business
    loan, even if you meet or exceed the other
    requirements.
  • Exactly, what is a good credit score?
  • The credit score scale ranges from 300-900.
    Anything above 750 puts you in good stead to
    secure a small business loan in India.

3
  • How can you check your credit score? 
  • In India, there are six primary credit bureaus to
    perform credit assessments. They are CRISIL,
    CIBIL, ICRA, Equifax, CRIF High Mark, and
    Experian. You can log into any of their websites
    and check your credit score, before you apply for
    a small business financing loan.
  • What can you do if your credit score is low?
  • A good credit score is the first thing a lender
    looks for in your business loan application. It
    is a measure of your ability to clear your debts
    on time, based on your past transactions. A poor
    credit score or the lack of one severely dents
    your chances of seeing the stamp of approval on
    your business loan application form.
  • But it is not the end of the road. Even if your
    present credit score does not cross the threshold
    mark, there are ways you can rely on to improve
    and maintain it.

4
  • Let us look at 6 of the most important ways
  • Keep Regular Tabs on Your Credit Score
  • Many people make the cardinal mistake of checking
    their credit score right before they are in need
    of easy small business loans. This might not give
    them enough time to deal with a negative remark
    on their credit score report. On the other hand,
    checking your credit score periodically once
    every 4 or 6 months will give you ample time to
    take the necessary steps to counter situations
    like these, much before applying for a finance
    for business.
  • Also, there is a misconception that checking your
    credit score affects your rating. The reality is
    when you check your credit score, it is
    considered a soft inquiry. Unlike a hard
    inquiry, a soft inquiry does not affect your
    credit score and is not visible to lenders.

5
  • Pay ALL Your Debits Timely (even the ones you
    consider small or insignificant)
  • Your unpaid debts credit card bills, EMIs can
    be a major roadblock to your application for
    finance for a business. Any payment defaults will
    drag your credit score down. Be it a cash crunch
    scenario or a case of missing the due date, you
    will eventually lose out on getting a small
    business loan.
  • So to avoid such scenarios, ensure that you set
    reminders for all your monthly payments. You can
    turn to technology such as mobile phone
    applications to assist you in this regard. As far
    as cash crunch scenarios are concerned, effective
    budgeting beforehand can help you stay out of it.

6
  • 3. Avoid Simultaneous Loan Applications
  • Applying for small business financing loans to
    multiple lenders in a short time span reflects
    poorly on your credit score. In such cases, your
    credit score report will throw up multiple hard
    inquiries inquiries made by lenders, which
    will adversely affect your credit score. To a
    prospective lender, you will come across as a
    credit hungry person.
  • Multiple business loan applications can also
    indicate that your debt burden may increase in
    the future a red flag for lenders.
  • Be Wary of Joint Loan Applications
  • To increase the chances of a business loan
    application being approved, many turn to joint
    loan applications for business capital loans.
    Although this method does improve your chances,
    what you may miss is a possibility that your
    co-applicant makes a mistake leading to a default
    in payment. This will affect your chances of
    getting small business loans online.

7
  • Keep an Eye on Your Credit Card Utilisation
  •  
  • For all your credit cards, you have to adhere to
    one simple rule do not allow your card
    utilization to breach 30 of the total credit
    card limit. This will keep your credit scores
    stable. A high credit utilization limit can also
    indicate the possibility of a looming debt
    burden. If your credit utilization is high, take
    steps to lower it. Be financially disciplined and
    avoid using your credit card for all your
    purchases. Excessive usage allows the lender to
    look at your spending habits, something best kept
    to yourself.
  • A tip Ask your credit card company to alert you
    if you are closing in on the utilization limit.

8
  • 6. Take A Loan
  • At first glance, this may seem counterproductive.
    But, it is actually a very effective way to boost
    your credit score. This is especially handy if
    you dont have a credit score at all. Remember
    having no credit history doesnt qualify you as
    a good candidate to receive a quick business
    loan. This is because the lender will have no
    idea if you can repay on time.
  • So, take an easy business loan an unsecured
    business loan is a better option if you dont
    want to risk mortgage. Pay your instalments on
    time, and if you can, try to close the business
    loan early. This will help you build your credit
    score.
  • Visit us https//www.tribe3.com/

9
  • Author BIO
  • Tribe 3 offers the best unsecured business
    loans online in India, on transparent and
    competitive interest rates. Click to know more.
  • Contact us 917666207768
  • Visit us http//www.webcogitate.com/
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