Top 7 Ways to Improve Your Personal Credit Yes, you can buy a business with poor or no . Business acquisitions are a lot easier for borrowers with good credit. There are special considerations when improving personal credit specifically for the purposes of a business.
One consideration is what type of business financing you are seeking. Are you seeking a loan collateralized by your businesses revenues or assets that requires a personal guarantee? Maybe you’re seeking a line of credit for the purposes of expanding your existing business? Banks might be more forgiving on giving loans collateralized with assets where a personal guarantee is incidental, however if the business does not have sufficient assets to pay the loan the bank is going to look more heavily on the personal guarantee of the borrower Top 7 Ways to Improve Your Personal Credit.
Here are a few tricks that can help you in the credit reporting process.
Obtain a copy of all 3 bureaus of your credit report Top 7 Ways to Improve Your Personal Credit –
You need to know where to start. Get a copy and highlight or mark all of the “derogatory” or bad credit.
Confirm or deny the derogatory report Top 7 Ways to Improve Your Personal Credit –
When consumers have had length of bad income issues they don’t question whether or not the derogatory reports are accurate or not. If some of the derogatory reports are not accurate – challenge them.
Ask your loan officer which reporting agency or agencies they use Top 7 Ways to Improve Your Personal Credit –
Certain types of loans such as SBA 7(a) require all 3 credit reports. However certain lines of credit only require one of the bureaus. Most loan officers will have no problem telling you which credit reporting agencies they use Top 7 Ways to Improve Your Personal Credit.
Ask your loan officer what other criteria they are looking for Top 7 Ways to Improve Your Personal Credit-
Check with your loan officer what they are looking for when lending money for small businesses or acquisitions. Ask about criteria such as debt to income, liquidity ratios, and price to earnings ratios for lending.
Pay down your credit cards when possible Top 7 Ways to Improve Your Personal Credit-
Top 7 Ways to Improve Your Personal CreditOne factor that can effect your business purchase will be the debt balance vs. available credit against your credit cards. High credit card balances can effect your FICO score, as well as debt to income ratios on the purchase of the new business.
Buy NOTHING until after the closing Top 7 Ways to Improve Your Personal Credit!
Too often business buyers have new equipment or cars that they buy prior to purchasing the business. There will be plenty of time to purchase things AFTER the business purchase. Adding more debt to your credit history may kill your financing of the new business Top 7 Ways to Improve Your Personal Credit.
Beware of cosigning for other people Top 7 Ways to Improve Your Personal Credit Top 7 Ways to Improve Your Personal Credit –
Cosigning for other people on or before your business acquisition can cause several problems. In today’s credit markets more consumers are actually not “cosigning” as much as they are actually borrowing on behalf of another party Top 7 Ways to Improve Your Personal Credit.