Have you ever heard about a business loan that can increase your credit score? If not, well, let me tell you. The purpose of this article is to help you understand the implications of getting a business loan even if you do not have a good credit history. Read on to find out how a loan can improve your credit score.
Your credit score is determined by a lot of factors including your payment history, repayment pattern, credit inquiries, length of time you have been working with the same organization and if you have opted for a secured or unsecured loan. You see, there are two types of loans that lenders make available to borrowers like a business loan and a home loan. Each loan carries its own set of implications that can either raise or lower your credit score.
The business loan can increase your credit score if you pay it back on time and keep up with repayments. However, if you are planning to apply for another business loan within the next few months, your chances of getting approval are very slim. This is because the lender needs to know that you will be able to pay for another one within the next six months or so. Since your credit score has already gone down a few notches, you are probably going to get denied. In such a scenario, it is advisable that you start improving your credit score right away before another business loan gets rejected.
A business line of credit is similar to a personal loan. The only difference is that you will be paying interest every month on the money you borrow. You will get the money transferred to your account on the agreed date and you have to repay the interest rate agreed upon or the amount you borrowed plus the interest rate over the period of the repayment schedule. If you are still unable to repay the money on the agreed terms, the lender can issue you a check and you will be required to sign the check. Thus, improving your credit score with this type of loan will be beneficial in the future.
There are other business loans that do not involve repayment terms and interest rates. You can avail these types of business loans without any loan appraisal. Instead, the lender merely requires you to present financial documents that justify the estimated value of your business. In some cases, you will also have to show your revenue figures.
There are various benefits of getting business loans offered online. You can view a business loan calculator that helps you work out the numbers easier. All you have to do is enter the required information and the calculator does the rest for you. The result will help you determine whether your business will be . . . . . . viable in the near future.
However, there is more to improve your credit score than just getting a business loan. Your credit history remains for the future and can affect your chance for employment or financing of a home. The best thing to do is to maintain a good credit score so that your credit history remains clean and clear. This will enable you to build up a good record over time and improve your credit score.
If you want to clean up your credit score fast, then you can simply get a copy of your credit report from all three major credit reporting agencies once every year. Make sure to check for errors and any wrong information. Once you find anything questionable, dispute it immediately. This will ensure that your credit history remains clean and clear and give you better chances of availing of a business loan in the future. Therefore, keep a good credit score and enjoy a better credit report in future.