Courtney C. Lipsey This post will explain how to get the best financing using your credit score.
What’s a good business credit score?
The business score is similar to your credit score. Business lenders can use it to determine how creditworthy you might be.
Your business score is likely to range between zero and 100. The closer you get to 100, the higher your score. Let’s take a look at the top business credit reporting agencies to help us define what a good credit score looks like.
- Experian A good business credit score is in the 76-100 range. You’ll be considered a low-risk candidate if your credit score is within this range.
- Equifax – Efax is unique because it assigns three scores each to businesses. These scores measure traditional credit risk, payment Index, and business failure. A payment index score of 100 or more is desirable.
- Dun and Bradstreet PAYDEX: Dun and Bradstreet PAYDEXs range from 0 to 100. A good credit score is anything that falls between 80 and 100.
Bad Credit Business Loans
Let’s look at bad credit loans to understand the benefits of business loans with good credit. Bad credit can make it difficult for you to be approved for small business loans. Lenders might deny you a loan application because they think you won’t repay them.
You won’t be able to lock in the terms and rates you want if you are approved for financing. You may accept a lower interest rate or a shorter repayment term. You might have to pay high fees or miss out on the perks offered to people with good credit.
You may also need a secured loan for your business with poor credit. You will need to secure collateral for your business loan, such as:
- Real Estate
- Vehicles
- Inventory
- Equipment.
Lenders will seize the collateral if you default on your business loans. Losing any collateral is a serious problem for small-business owners.
SBA Loans for Good Credit Business Loans
There are many options for good credit business financing. SBA loans are one of the most popular. These loans are backed by the Small Business Administration (SBA) and provide many benefits. SBA loans have lower down payments than other loans.
These loans also have lower interest rates and longer repayment terms. SBA loans come with a guarantee. If you default on your loan repayments, the lender can recover a significant portion of the balance. The SBA will only lend loans to borrowers who have good credit.
It is important to remember that SBA loans may not be right for you. You must prove that your other options have been rejected.
You might find it beneficial to look for alternative lenders specializing in small-business owners. Your good credit rating will increase your chances of being approved for the term loan amount you want.
How to Get a High Business Score
A good business score takes effort and time. Once you have a good business score, it will open up the door to credit-worthy financing. This will allow you to get the rates, terms and perks you want.
You could also save thousands over the term. Here are some ways to improve your business credit score.
You Can Pay Your Bills On Time
Although this may seem obvious, we must mention it: Pay your bills on time. Your credit score can be affected if you miss or make late payments. We recommend setting reminders on your calendar or enrolling in automatic payments to avoid missing a payment.
Reduce Your Credit Utilization Ratio
The credit utilization ratio measures how much credit you have used compared to what is available. Credit reporting agencies will give you a higher score if your credit utilization ratio is less than 15%. Keep your score low by paying off your debts, decreasing your credit card spending and paying your bills more often than once per month.
Dispute errors or inaccuracies
Every so often, check your credit report for business. You can dispute any negative remark, such as an account not paid or one that hasn’t been paid. If necessary, a business credit reporting agency will investigate and help you resolve the matter.
How to Get a Business Loan
If you are satisfied with your credit score and feel it is within the “good” range, the next step is to find the right loan option for your small company.
- Do your research: Search the internet for lenders that offer business loans with good credit. You can find many online and offline lenders and credit unions that offer them.
- Compare Loans After you have found business loans with good credit, it’s time to compare them. Compare loan types, interest rates and repayment terms.
- Read reviews: Once you have narrowed down your selection to a few business loans that are good for credit, review them on the Better Business Bureau (BBB) and other websites. This will give you an idea of the lender’s reputation and the funding process.
