You know by now that success in a loan application is determined by many factors, and one of the most important is your credit score. Paying bills late or being in debt both wreak havoc on your credit score, but there are other seemingly harmless moves that can slowly sink your credit score over time.
Here are some things to avoid if you want a stellar credit score—and a better chance at obtaining that business loan.
1. Unpaid Anything
Anything that goes unpaid can hurt your credit score. Parking tickets, rent, even library fines will affect your score if they are reported to a collection agency. If you do eventually wind up paying late, the collections can still appear in your credit history report for another seven years! Don’t take a chance — just pay everything on time.
2. Too Many Cards
Opening up a few credit cards over a number of years is not a big deal, and should not harm your credit score. However, opening up several new cards in a short period of time will definitely cause your credit score to dip. Sure, having multiple cards may seem like you are expanding your credit limits, but this benefit is temporary, and the downsides are far greater.
3. Maxed Out Cards
Over-the-limit account balances will bring your credit utilization to a whopping 100%. This will hurt your credit score. In fact, simply having a very high credit card balance can decrease your score.
4. Too Many Credit Inquiries
Credit inquiries account for 10% of your total credit score. Making several credit inquiries within a short period of time can drop your credit score, and even several loan applications within a short period of time will hurt your score as well. The moral of the story: don’t apply for a loan or make a credit inquiry until you are absolutely ready!
Biz2Credit can help you figure out the best path to take. Loan specialists can help you navigate through the array of options to pick the one most suitable to your business. Visit the website or call (877) 861-2210 for help.