You can roll out your new business or seek to improve your existing shop with loans or leases, of course. We’ve spent a lot of time telling you about how wonderful loans can be.
To get them, though, you’re going to need quality credit. One facet of that quest for loans that is too often overlooked is credit history.
Let me give you a non-business example of where a lack of credit history can hurt you, courtesy of a friend of mine. He had plenty of cash on hand for a down payment, but had more or less never used a credit card in his life. Needless to say, he was turned down repeatedly for a mortgage and loans, frustrating the house-buying process for several months.
Ultimately, he wound up with the house, and he’s now perfectly happy there. But the lack of an established history of credit use delayed that process significantly, and it could do the same for your business.
Any lender that isn’t a ripoff artist is going to care about that history for your business. The longer your business has been around, and the longer you have shown the ability to pay off your credit cards in a timely fashion, the better off you are.
Here’s three ways you can accomplish that.
- Get a business credit card early, and use it often. It doesn’t matter if you make huge purchases, but if you’re using it and paying it off, you’re establishing a workable credit history. It also helps your credit score.
- Open more than one line of credit. Lenders are looking for responsible business owners when they’re lending, and you can set their minds at ease by proving you can juggle multiple monthly payments.
- Keep your credit score high. Your history there never really goes away, but if you had a bad year, you can show it’s dead and buried. Anything to lower the risk to the lender and increase your chances of getting the business loans you need.
Hopefully these tips will help you get a good, solid credit history. If you’re looking for a loan and you want to see how you’re doing, reach out to Direct Capital today.
Photo credit to SXC