If you have a business, access to credit is imperative. However, certain factors can impede your ability to get the credit you need. Understanding these factors can help you fix any issues and get your business on a firm footing.
How Long You’ve Been Doing Business
One of the single most important factors that can affect your business credit score is how long you’ve been doing business. If you’re just starting out, you won’t have the kind of track record a lender might like best. This is why so many business startups can struggle sometimes. That’s something to bear in mind if you’re getting a new venture in place. It’s a good idea to have enough money on hand to meet your initial business expenses for at least three months.
Credit Enquiries
Another factor that can influence your credit is the number of credit inquiries you’ve made in the recent past. According to Lantern by SoFi, this is why you need to think about, “multiple financing options to get your startup off the ground.” A lender will look at how many credit cards you have on hand right now.
It’s a good idea to know your credit rating. Remember, you can still get bad credit small business loans. That’s why you should be careful when you make any kind of credit-related effort. Knowing what you’re doing as you do it will ensure that you’re on top of it all and ready for anything.
Prior Taxes and Liens
Over time, people develop a credit history. If you’ve been in the business world for any length of time you have at least some credit history. All of your prior tax history will stay on your credit history for seven years. That includes any previous bankruptcy filings including Chapter 11 and Chapter 7. If you’re not sure if something is still on your record today, it’s best to do a credit check. A business owner should also be aware that there may be claims on your business from creditors as well as the government. If those liens have not been cleared up, you can expect this to impact your ability to gain access to a business loan.
Payment History
Sometimes people may have credit and fail to pay things on time. Any lender will expect to be paid back on time as required. That includes all of your credit issues such as your mortgage and personal credit cards. If you have missed any payments at any point in time, the lender will want an explanation as to the reason why the payments were late. Any personal problems such as a temporary job loss or unexpected medical bills should be noted and explained to your lender. Many banks are willing to overlook this issue if you’ve done better at managing your credit in the immediate past.
All of these crucial factors that can influence your business credit score should be known about well in advance.
