If you went to your local bank today and asked for a loan, would you know what criteria they would use to evaluate your application? You may be surprised to know that your personal credit score — even if you are a corporation — and business credit score may be used by your bank.
A recent survey by the U.S. Small Business Administration found that many lenders use “both owner and business credit scoring as a key metric in the small business loan decision.”
While credit scoring can provide lenders with a quick and easy way to reduce the subjectivity in lending, it does have its drawbacks for the business owner. For example, the lender’s dependency on credit scoring doesn’t provide the borrower with the chance to explain a one-time credit problem that may be unlikely to occur again. And, if you have no previous loan payments and credit card usage, you may not even qualify for consideration.
Some lenders do recognize the drawbacks of depending upon credit scoring only and have shied away from strictly using this as a determinant. If you are shopping for a business loan, check around and ask questions. Find out exactly what criteria your lender plans to use to evaluate your application.
For more information contact Nevada Corporation, who are professional in small business at 888-284-3821.