Are you considering applying for a small business loan? Lenders are likely to check your credit history and a strong business credit score may increase your chances for approval.
To become more eligible for a small business loan in Ogden or any other place in Utah, you must build your credit in the following ways:
1. Boost Your Personal Credit Score
Your personal credit rating may influence your business credit rating. Pay your bills on time and maintain a low ratio of debt to credit on your credit lines and credit cards. The same goes for your business partner or major investor.
2. Operate Like a Business
Mixing your personal and business expenses won’t help your business profile and may hurt your personal credit. Consider incorporating the business as a limited liability company. Open business bank accounts and pay all business expenses with the company’s credit accounts.
3. Prove Your Company’s Credit Worthiness
Before they loan you a big amount of money, lenders may want to see your lending history. To build your profile, borrow small and pay on time. Work with suppliers and vendors on credit, use your business credit card, and apply for small bank loans. These lenders can serve as your credit references down the line.
4. Grow Your Credit and Use It
After establishing a payment history, increase your credit limit strategically. But remember to keep a favorable credit utilization ratio, preferably about 30 percent. Maxing out your credit cards shows that you’re unable to pay your bills.
5. Watch Your Credit Profile
Your business credit profile needs to be correct or else your building work will be in vain. Check the report for mistakes and raise any issue promptly. In addition, make sure the report is up to date.
Potential lenders may reject your business loan application if you don’t have a good business credit score. Luckily, there are ways to strengthen your business credit. Build your credit score and improve your odds of getting approved for an affordable small business loan.