Do you know that asking for a personal loan can hurt your credit score? You may be thinking that it does not matter if you have a bad credit score. However, you need to think again. There are many lenders out there who are looking at your credit rating before they give you the go ahead for a loan.
They may deny your application outright. Or they may give you the okay but then attach a number of conditions on the loan that you really do not need. For example, they could require you to pay off your debts in a specific time frame or else they could make you pay more interest. The last thing you want is your credit rating to be affected by these conditions and of course they could affect your credit score.
In fact, most of the lenders out there today make it very clear that any personal loan or business debt that is outstanding will be reflected negatively on your credit report. Most lenders would tell you this up front and avoid you. Yet if you ignore them they could continue to pull your reports until you request a copy of your credit report from all three credit bureaus. Now I know many of you will say “so what, I am paying my bills on time” and that is true. The only thing which is not true is the fact that you are making your payments on time and building your credit score at the same time.
However if you take the time to look at your credit report, you will see some things that you can do that will improve your credit score over time. For example do you have any outstanding debts from other businesses which you owe money to? Can you prove you own a business at all? If you can answer yes to both questions, you can rest assured that a personal loan or business loan will not hurt your credit rating at all.
Now if you are thinking about a personal loan or business line of credit with bad credit will harm your credit score. This is not the case at all. In fact, if you work diligently to prove your creditworthiness you can actually increase your credit score. As I mentioned to prove your worthiness is very important and once you have done that you can work towards improving your credit score over time.
You first need to get copies of your credit report so that you can review it for mistakes. Once you have done this check it against the information in your own credit report and see if there are any errors. Most people tend to miss or forget to report changes to their accounts and this is why a credit score will suffer. Also look and see if you can find any outstanding debts on your business report which you should have also reported. Many people think that this will hurt their credit score, but in fact it will actually raise your credit score.
If you have been denied a loan elsewhere in the past then it is unlikely that you will . . . . . . be given a personal loan now. If this is the case and you are in need of a business line of credit, you can ask your existing lenders to add you to their books. A lot of lenders already have an agreement with other banks and this is where you can make a deal. Be sure to read and understand the terms and conditions of the loan you are being offered. There are two ways to apply for a loan, online or in person and whichever you choose you must ensure that you read the terms and conditions thoroughly.
When you are considering a business loan with bad credit, it is important to know exactly what you are getting yourself into. Do not borrow more than you absolutely need and try to only use this money to help expand your business. It may sound tempting to get yourself another loan but don't do this at any cost. Remember it is your reputation that is at stake and this can affect your future employment opportunities.