If you’re looking for a business loan on favorable terms, you should have a good business credit score. Bad credit is one of the main reasons entrepreneurs get rejected when applying for business funding.
However, you can also turn to reliable alternative online lenders like First American Merchant, a reputable business loan provider, to get financing without challenges. Your credit history is not a problem for FAM.
Below you can find 7 tips that can help you improve your business credit score and get a better business loan.
- Set up a Separate Business Entity
According to US government, more than 70% of small businesses operate as sole proprietorships. These businesses aren’t incorporated or registered as an LLC (limited liability company).
- Establish a Credit History for Your Business
Develop a credit history for your business. Start with applying for a business credit card. Pay your credit card bills on time, or it would be better to pay them earlier.
- Pay Great Attention to Your Personal Credit Score
According to Experian, lenders look at both the business credit and personal credit scores of most small businesses with under 20 employees.
- Choose the Right Lender
Choose a lender who can help you achieve the strategic goals of your business. Meeting your near-term money needs is not enough.
- Don’t Keep Higher Credit Card Balances
Keep your outstanding balances owed on credit cards or lines of credit low. This way, you can have higher credit scores.
- Keep Your Business Credit Under Control and Fix Mistakes
Check for mistakes and fix them before applying for a business loan. Check major business-credit reporting sources such as Experian, Equifax, TransUnion and Dun & Bradstreet.
- Avoid Unintentionally Damaging Your Score
Before applying for business financing, find out whether accessing your credit history is going to be a “hard pull” or “soft pull.” A hard pull can have a negative impact on your credit score.
With the help of the above-mentioned tips, you can develop a strong business credit score and get the necessary business funding to expand, hire new employees, purchase new equipment and just grow your business.