Improve Your Credit Score – Are you getting ready to apply for an equipment lease? Before you apply for that loan, you may want to “beef up” your credit scores and also take a look in this loan application for business growth tips. Unfortunately, we don’t always have time to go through a lengthy credit restoration process. Fortunately, there are a few tricks for quick points.
The guidelines to get a business loan approved. If you understand the lender’s procedures a credit department goes through while looking at your application, the chances of getting your loan approved increase significantly. Every lender is different. Typically, most lenders are looking at two things concerning credit and 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 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 only reports your balance to the bureaus on one day of the month. Which day? Each creditor will report on their schedule. For example, suppose your reporting day is on the 1st, and you wait to lower your maxed balance on the 2nd. In that case, it will be an entire month before your payment, and a lower card balance is visible. This is the reason that a credit report can show a maxed balance after you’ve already paid off your card. One strategy is to call the credit card company and ask what day of the month they report your balance to the bureaus. Then always make sure you make a payment before their reporting day, so you benefit immediately.
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 client.