Building good credit has always been very important. The business’ future with banks and clients is dependent on its creditworthiness.
3 Tips to Get Your Bank Loan Approved
1. Neatly Arrange Documents
To apply for a loan, one must firstly arrange all the required documents neatly together. Handwritten documents look unprofessional, so all must be printed or typed. Including a cover letter is always recommended.
2. Have a Positive Attitude
While applying for a bank loan one must keep his/her negativity at bay. Presenting yourself as an entrepreneur who will repay the loan gives a boost to the image.
3. Be Confident
Confidence enhances chances of getting a loan. A businessman who is not sure of the purpose of loan, or who does not know how to converse with the bank authorities will only attract negativity. So, one must visualize the positive results of bank application.
Here are some handy hints to help build good credit for your business:
1. Buy a House
A house is a great way to build credit as it will give your creditors security that you own something. One can buy a house at a minimum of 12 months rental. As long as one has regular income to pay, buying a house is not difficult.
Another important thing is to buy a house on your own name. This will help in getting loans easily in the future.
2. Secure a Credit Card
Having a credit card is a good form of security. The cardholder must be willing to pay on time. This, in turn, will satisfy the issuer.
One must be careful about interest rates and fees on credit cards. These are painfully high. So, it is advisable to use only one credit card at a time, as too many cards will only weigh down the credit score of the business.
3. Pay Bills On Time
Another way to build credit is to pay all your bills on time. Being late for bills defeats the entire purpose of credit.
Payment histories are very important, as they help the banks and financial institutions to judge you and your business. Paying off the required balance every month shows that one is capable of paying bills in future too.
4. Take Loans On Installment
These days, banks offer short-term installment loans which require minimal amount of payment to be made every month. Many banks do not even have the formalities of collateral and co-signers.
Researching the best interest rates among banks is a good option to decide from where to take the loan.
A family member or close friend can be used as a co-signer, according to the banks’ formalities. Once the loan is taken, one must make sure that it is paid on time. Late payments only hurt the sentiments of business lending.
5. Do not Open too Many Accounts at Once
When it comes to building credit, start off slowly by opening one or two accounts. Use them carefully for a few months before applying for more.
According to Consumer Credit Reporting Agency Equifax, applying for too many accounts in a short period of time could be a red flag to lenders.
Lenders always want to see the business’ money management skills, and if these are not up to mark then it they do not lend.