What factors go into determining your company’s credit score? What factors increase your chances of securing a loan?
Here are a few things to consider when it comes to your business credit, as well as how to make the most of them:
#1 Payment History
This is a crucial aspect of your business credit profile. It is the foundation for your D&B PAYDEX score. Vendors will examine your entire credit profile, which includes your PAYDEX.
#2 Blanket UCC Filings
Pay attention to the order in which you get different sorts of loans, as well as the UCC filings that the lenders will make. A blanket UCC filing may be filed by some lenders. This simply means that they have a stake in all of your assets. Any further UCC filings will be superseded by these blanket filings. This severely limits your capacity to obtain credit elsewhere.
What you can do is arrange your credit carefully and negotiate UCC filings that suit your needs. For example, if you need specific assets excluded from a UCC filing in order to use them as collateral for another loan, let them know ahead of time. You’ll be able to get those goods exempted from any blanket filings this way. Alternatively, obtain the loan or account with the more detailed UCC filing first. According to some experts, it’s a good idea to open accounts with competing UCC filings at the same time. And simultaneously negotiate the details with each party.
#3 Company Financials
It’s critical to keep your financials in your credit file up to date when working with D&B. If they aren’t, it could have a negative impact on your business when the lender compares the available data. What you can do is update your credit reports’ financial information. Make sure they accurately reflect your current situation. And make it a point to update frequently.
#4 Company Legal Structure
The choice of an LLC or corporation over a partnership, for example, can have an impact on business credit. Sole proprietorships and partnerships are less likely to get loans from banks. Corporations and limited liability entities are preferred. So, if you aren’t already incorporated, you should consider doing so. The benefits extend far beyond your capacity to obtain credit.
Other elements affecting your creditworthiness include the amount of debt you already have and how strongly committed you are in your firm.
Even your personal credit history can influence whether you are approved or denied. We’ve examined four of them in this article. The more complete the picture you can portray, the greater your chances of securing loan approval.