05 Oct 3 WAYS TO IMPROVE YOUR BUSINESS CREDIT
Mr and Mrs Chai* run a company and needed funds for their business operation. They have a combined $100,000 savings in their bank. Yet, several banks turned down their credit request.
“I tried calling the bankers but nobody explained to me why. They gave me a flat no.” says Mr Chai.
It can be puzzling and frustrating not to know the reasons for loan rejections. In our area of work, we have seen many business owners who encountered several banks and finance institutions turned down their credit requests.
Finally Mr Chai found out from our Business Development Executive the main reason for rejection. They have poor personal credit rating from their credit cards, owing several thousands dollars, late or no payment.
There are ways to build your business credit to avoid the same rejections that Mr and Mrs Chai faced early on. Here are 3 areas for consideration.
1. Mind your personal credit rating. One of the main criteria in many banks’ decision to loan businesses money is the owners’ personal credit ratings. They look for a personal credit score of at least the mid 1800s. Extracted from Credit Bureau Singapore, “The score range from 1000 to 2000, where individuals scoring 1000 have the highest likelihood of defaulting on a payment, whereas those scoring 2000 have the lowest chance of reaching a delinquency status. Together with the score, the risk grade and risk grade description are provided.”
Solution: To boost your credit score, pay personal bills on time, keep a low ratio of debt to available credit on personal credit cards and credit lines, and make sure any balances remain under 30% of your limit on credit cards.
2. Leverage on business funding agency’s network. Banks can change their loan policies on a moment’s notice and may cut your credit limit abruptly, so it may help not focus on one particular bank.
Solution: Instead of going from bank to bank, you might consider to choose a business funding agency instead. Speak to the one person who will put your [loan] package together and go to the various banking and financial institutions for approval. This will save time and all the hassle to get a loan.
3. Consider alternatives. Traditional banks are not your only option at credit. There are a growing number of other options, such as securing investors, crowd funding sites, and Business to Business (B2B) lending etc.
Solution: Using these alternate channels can at least indirectly improve your chances of getting credit in the future.
Hope these information would help you in securing funding for your business. Contact us to find out more! http://bit.ly/2drlhRz
*Name has been changed to protect identity.