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How Your Credit Score Can Influence Your Small Business Loan Options

One of the most important parts of the small business loan application is your personal credit score. The better your score, the more loan options that are available to you and the better your chances of securing an affordable small business loan. Why? The way lenders see it, they’re lending to the small business owner, so they want to make sure they’re dealing with someone with a history of reliability when issued credit in the past.

If your personal credit score is less than perfect, there are a few compensating factors lenders will look at, and plenty of loan options that are still available to you.

small business loans credit scoreKnow Your Credit Score

Before you apply for a small business loan, it’s a good idea to pull your own credit report and check your credit score. You can get your report for free at annualcreditreport.com. By pulling your own credit report, you’ll know what lenders will be looking at.

What Makes a Good Credit Score

Your credit score, or FICO (for Fair Isaac Corp.) score, is a number between 300 and 850 calculated from a formula that’s designed to gauge your creditworthiness. Each of the three reporting credit bureaus calculate a little differently, but a score between 750-850 is generally accepted as “great”. A “good” score is between 660-749. “Fair” and “Poor” respectively fall between 620-659 and then below 619.

small business loans computer

How to Monitor Your Credit Score

You’re entitled by law to one free credit report each year from each of the three credit reporting agencies (Equifax, Experian and TransUnion). You can order yours at annualcreditreport.com, or get one from each of the bureaus every four months. However you get your reports, scan them for abnormal activity like accounts you didn’t open. Watch out for the bureaus promoting other “proprietary” scores, like Experian’s PLUS score or TransUnion’s TransRisk score, that supposedly measure your credit risk by some other formula. You only want the FICO score—the same one lenders request.

If the thought of someone running up huge credit card debts in your name keeps you up at night, you might consider a credit monitoring service like Nav.com where you can set up credit alerts, check your score and sign up for identity protection.

How to Improve Your Credit Score

Your credit score reflects credit payment patterns over time. With that in mind, negative information on your credit report will take time to repair. There is no quick fix for bad credit scores, but there are things you can start doing right now to improve your score and rebuild your credit history.

Your Priorities Should Be:

  • Minimize outstanding debt
  • Avoid overextending yourself
  • Refrain from needlessly applying for credit

The most important thing you can do is pay your bills on time. Delinquent payments and collections can have a major negative impact on your credit score. Most negative changes in your credit score are due to a negative report to your credit, such as a delinquency or collection account.

These will continue to affect your credit score until they reach a certain age.
  • Minimize outstanding debt
  • Avoid overextending yourself
  • Refrain from needlessly applying for credit

Small Business Loans Options

Options – Vetted Lender Network

Lendio partners with the industry’s top lenders to offer a wide range of small business loan options. When a small business owner applies directly with any lender, they may or may not qualify for that lender’s small range of loan products. They also may be unaware of other options that better meet his or her particular need and situation. With our large network of best-in-class lenders offering virtually every available loan product, Lendio can matches small business owners with the very best loan option available. To learn more about our lenders, visit the Lender Ratings & Reviews page.

small business loans speed

Speed – Innovative matchmaking technology Network

Searching for the best rates and loan options is stressful and often results in headaches, but it doesn’t have to. That’s why Lendio developed the tools to save you time and money by matching you with a lender that will provide your small business with the best loan option. Rather than having to submit your information to multiple banks and lenders, we will submit your information to our large network of lenders saving you time by not having to fill out multiple forms and talk to multiple people to find the best option for you. Just by answering a few simple questions you will be instantly shown a wide range of loan options that fit your business needs. We make getting a small business loan simple and fast.

small business loans trust

Trust – White glove advocate experience

Small business is complicated enough, from dealing with quarterly tax filings to managing cash flow. You’re busy running your company and doing the important things – making the money needed to take care of your family and your employees. Taking the time and effort to understand the complex world of small business financing is another task you don’t need to pursue. Lendio is here for you and offers you a true white glove experience.  You complete an inquiry and a Funding Manager will jump on a call with you and tell you all your options. They’ll help you pull together the necessary documents and forms. They’ll hold your hand every step of the way. Lendio’s extensive experience will ensure you can easily evaluate your many funding options and choose the right one. Lendio is the partner you can trust to turn an otherwise burdensome experience into one that is quick and painless.

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