To be able to avail of many financing offers by many lenders, having a good credit score is a must . If you have one handy, this will allow you to get a decent amount with reduced interest rates, with flexible payment terms . Getting a good credit score is not the easiest thing in the world in order to get a mortgage for bad credit.
It can take a long time to establish a good credit if you have only just started a business for example, if you haven’t borrowed and showed you can pay back debt this will count heavily against you .
This is not the case, however, when you have a bad credit rating . You either have to work out the bad credit mortgage repair on your own, or you can pay a professional to help you to repair any bad marks . Only when you fixed your score can you start to build it up .
Initially though, before you start thinking about getting you to get a bad credit history mortgage, you need to have a credit identity first . This can be done by putting up your business as a corporation or an LLC . These put you in the perfect place to start building credit . Since most financial lenders are eyeing clients in corporation or LLC, having your business as one will allow you to get a loan faster than any business enterprise .
You can also setup a record with a credit company , or Paydex. Credit agencies will keep track of your credit transactions, rate them and give them scores . When finacial institutions do a credit check they are looking at the same scores so it will give you a heads up .
Paydex scores by big companies like Dun and Bradstreet will keep records on how well your company is paying your credit bills. The score ranges from 0 to 100 – the higher the score, the bigger the possibility your loan will get approved.
Now that you have established your credit identity, you need to apply for a loan before you can actually start building your business credit scores . Your first choice is a secured loan where the financial institute will allow you to borrow with assets used as collateral . The advantage of this type of loan is that it offers a much better interest rate and you can usually borrow more, the disadvantage is that you will lose you assets if you can’t pay .
The second type of loan is an unsecured one which means your assets are not put at risk . Since the risk to the lender is higher compared to unsecured loans, the financial institution might be very strict with its application, coupled with a higher interest rate and payment schemes .
You should also ask what type of credit you want to use . Below are the most common credits you can bring out in any lender in your area :
1. Business credit card
Quite separate from a personal credit card, this type of credit is more lucrative to be used in business ventures due to its reduced APR, and flexible interest rates (depending on the amount used within the month) .
2. Short/Long Term Loans
These kinds of loans allow you to borrow a fixed amount of money from the lender to be used in any way you wish . Attached with fixed interests with payment terms ranging from 5 to 10 years depending on the amount borrowed .
3. Lines of Credit (LOC)
Lines of credits are more for business who are into operation 2 years or more . Credit lines will let you have a fix amount of credit on the bank, which can be used to pay for unexpected expenses that crop up during the operation of your business . The interest expense will depend on the principal amount you have left, and will reduce as you pay your debt until it reaches zero.
