If you are starting your own business, it likely means you will need to apply for a business loan. It is rare that a start-up business has all the money it needs. If you do apply for a business loan, you will first be required to check your credit report. The lenders will check this first in order to determine whether they would give you a loan or not. You should make sure that all the information in your credit report is updated and correct. The process of checking your credit report is as follows.
Order a report from one of the bureaus
There are three main credit bureaus that can run your credit report: Experian, Transunion and Equifax. You should order a copy of your credit report from any of these agencies. The reason is that every time your credit report is pulled out by a lender, your credit score is affected. However, ordering directly from any of these organizations won’t affect your credit score negatively. You are entitled to a free report from one of these agencies once every year. You will need to provide proof of identification and personal information to get access to your report.
Check your report for errors
Your credit report contains all of your personal financial information including your social security number and current and past employers. It also has a record of all the credit accounts you have opened and the amount overdue if in any of them. It contains reports on delinquencies if you had any and inquiries that potential creditors made. Thus, it is very important that you confirm that all of the information is correct. There may be instances when delinquencies were not removed when they should have been, or overdue penalties are still shown when you have cleared them. Make sure you write a letter to the credit bureau and also the concerned creditor to correct the errors that have occurred.
Improve your credit report
If you find out that you have late payments in your report and quite a few revolving accounts having high balances, then you will not be getting a loan easily. Use the information in your credit report to correct late payments and pay off your major balances. You can also get a co-signer who has a stable credit history on loans with late payments. These issues are all fixable and the sooner you do it, the better will be your chances to get a loan. However, delinquencies are more serious and they stay in your record till 7 years. Thus, if you are delinquent on an account try to make all the other accounts up-to-date in order to make up for that.
Preparing your credit before you apply for a loan will increase your chances of securing a loan with favorable terms and rates.
Marie is an accomplished financial writer who gives her advices on personal finance, personal loans online, credit and debt on various financial websites. Her widespread knowledge in finance has made her very popular amongst many and her advice is highly sought after.