Every business needs to borrow money at some point
One of the first recommendations you’ll get from the Saafenet Corporation is to straighten out your credit if you’re considering opening a business. Though our training manual will help you to raise the money to get started in many small businesses, at some point that money will be exhausted. No matter what type of business you plan to open at some point you’ll need a loan to cover payroll, for operating capital, or for dozens of other reasons. However, if you have weak or poor credit, you will either get disapproved or pay unreasonable interest rates.
What Is a Bad Credit Score?
Lenders look at a borrower’s credit score to evaluate the likelihood of repayment. The higher the credit score is, the more likely a borrower will pay his loan. The lower the credit score is lenders have to make a decision to either disapprove the loan or to charge high interest to cover their risks.
The difference between good and bad credit rating vary widely depending on the lender. Some lenders won’t even look at you if you have a credit score that’s below 650 while others may still consider your application.
Here’s the general assessment of credit scores:
- 760-850 – Excellent
- 700-759 – Very good
- 660-699 – Good
- 620-659 – Poor
- Below 620 – Very poor
Borrowers who have good to excellent credit ratings generally receive the best loan terms. Those that belong to the poor and very poor categories end up with high rates, if they’re approved at all.
There are steps you can take to get a loan even when you have bad credit. But the most sensible course of action is to improve your credit. Complete instructions for improving your credit free without the expense of a credit counselor are available on the front page of this website free of charge.
Improving your credit score:
If you follow our guidance, you can dramatically improve your credit score within three (3) calendar quarters. And it’s a smart move to improve your credit score before applying for a loan. This doesn’t mean you should wait to start your business but improving your credit score must be a high priority. Using our fundraising methods you may not need a loan to get started. Which would be hard to get anyway. But at some point all businesses need a loan. So reducing your debt, using secured credit cards and making on-time payments must be a part of your plan.
Get a co-signor:
A co-signor is someone willing to agree to paying off your loan if you default. Of course the co-signor must have good credit to qualify. And, it’s important for you to make every effort to pay off the loan or you will cause the co-signer to have to pay for your debt. Try to use this as a last resort.
Apply for a bad credit loan:
Only use this option if you are in dire need of borrowed funds. There are lenders that have special programs for borrowers with poor credit. The interest rates and terms will typically be poor. So in the long run,it’s always better to work to improve your credit score.