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Lorin Hanks
Improve Your Credit Score
Are you getting ready to apply for an equipment lease? Before you do, you may want to “beef up” your credit scores and also take a look at this loan application for business growth tips. Unfortunately, we don’t always have time for a lengthy credit restoration process. Fortunately, there are a few tricks for quick points.
The guidelines for obtaining approval of a business loan. Understanding the lender’s credit department’s procedures when reviewing your application can significantly increase the likelihood of approval. It’s important to note that every lender is different. However, most lenders focus on two critical factors related to credit and scores.”
- Scores
- Overlaying guidelines
Your scores often dictate your interest rate. Further, there is usually a minimum score requirement ranging from 580-700 (700 is a common expectation for high-end loans). Keep in mind that getting turned down can happen for reasons that do nothing with scores. There are “overlaying guidelines.” With high scores, you can still be denied due to bankruptcy or an unpaid collection or charge off (standard overlaying guidelines).
Here are the best things you can do for the fastest increase possible.
- Pay down credit cards: By far, this is the fastest way to gain points. Your scores change immediately by lowering your credit card balances the next time your credit card is updated.
- If you don’t have a credit card and have a friend or a family member you trust (with a perfect credit history). There is no risk to the cardholder. You won’t even be issued a card. However, you will get their payment history added to your credit.
- Pay off charge-offs and collections: This doesn’t always get you points. But, alas, it’s worth noting because lenders may deny you this. Why? They are worried you’ll be sued and garnished, which would compromise your ability to pay your new loan.
The fastest way to improve scores is by paying down credit cards
How can you have multiple lines of credit, no collections or public records, spotless payment spanning many decades, yet still have low scores? The answer is credit cards that are to their limit or maxed out. Therefore, credit card utilization is one of the most significant ingredients in the scoring algorithm.
Score Simulator To The Rescue
Most websites will have a credit score simulator. This credit management tool is very effective for seeing what “scenario” you can implement to get points. Sometimes closing an account can help (usually a new card you don’t need). Sometimes you need to open a new account (if you have a “thin” file). From my experience, the score simulator’s most important use is finding out how to manipulate your credit card utilization. In other words, how to get the most “bang for your buck” when paying down cards. Sometimes $1,000 brings you the same about of points as $5,000. Score simulators are standard. Even Credit Karma has a score simulator (it’s free).
How to use a credit card to get you the most points possible?
Did you know that the balance on your credit card can cause a 200 point swing? That’s an extreme case. That said, a 20-50 point swing is typical. Anything over 50% utilization can severely negatively impact your scores. The bottom line, the lower the balance, the more points the card will give you.
When does the credit card company report your balance?
Your credit card company reports your balance to the credit bureaus on a specific day each month, and this day varies for each creditor. For example, if your reporting day is on the 1st and you reduce your maxed-out balance on the 2nd, it will take a whole month for the lower balance to show up on your credit report. This is why your credit report might still show a maxed-out balance even after you’ve paid off your card. To ensure your payments have an immediate effect, call the credit card company to find out their reporting day and always make your payments before that day. It’s also important to regularly check your credit report to confirm that your efforts are accurately reflected and to catch any errors early.
Get Your Equipment Loan Approved With Poper Planning
Whether you are looking for an equipment loan of $25,000 or $500,000, you will probably be required to provide a personal guarantee for your company if your credit score is high, the chances of an underwriter approving your request improve.
Equipment Leases Inc. is grateful for talented professionals willing to contribute their wisdom and experience to our business owners and clients.
