When it comes to commercial lending, your credit score will play an important role the approval of your financing request, the type of loan you can secure, and even the interest rate you will pay each month during the loan’s term. If you don’t currently have an ideal credit score, you may find that your options are limited with commercial lenders in your area. But don’t worry -- there are steps you can take to improve your credit score. Here are several near-term and long-term tactics you can take to raise your credit score and give yourself more options as you search for the best commercial lending solution.
1. Pay Your Bills on Time, All the Time
Payment history constitutes a large portion of your credit score, and if you miss payments regularly or are often late, you could negatively impact your score. Since payment history is so closely tied to credit score, it pays to take the necessary steps to ensure your bills are paid on time, such as:
- Creating reminders on your digital devices
- Setting up automatic payments
- Know when your various bills are due
- Consolidating bills if needed
2. Pay Off Your Debts
Your debt-to-income ratio also accounts for a significant percentage of your credit score. Most lenders will look closely at your debt-to-income ratio, so the more you can pay off, the better positioned you will be during the underwriting process.
3. Reduce the Balance on Your Credit Cards
Keeping your credit card balances below 30 percent of your credit limit is generally a good rule of thumb. Higher balances get more expensive over time thanks to interest payments, but they also limit your available cash-flow in a given month. To keep balances low, you should pay off nuisance balances (small balances spread out over multiple cards), and work to stay on top of your payments.
4. Keep Up with Good Payment Habits
The longer you hold credit and build a good reputation, the better your score will be. It takes several years to build a good credit history, so cultivate good habits and stick with them for the long-term.
5. Reduce Inquiries into Your Credit History
The more inquiries there are into your credit history (such as when you apply for a loan), the lower your score will go. Although it’s not always possible to prevent credit history checks, you can limit them by not applying for credit you don’t need. You may not be able to improve your credit score overnight, but following the steps listed above should help you get on the right track. And remember to keep your options open when searching for a commercial loan solution. The fact is, you do have options – even if your bank has cited your credit score as the reason they turned down your loan request. Visit Commercial Direct’s Loan Customizer today to see if our flexible programs are a good match for your specific needs.
Salomon Wancier is a creative and innovative Marketing Executive and Business Coach with 19+ year record of achievement managing marketing teams, forming strategic alliances, developing and directing marketing initiatives and using multiple vehicles/channels in continuously changing environments to increase sales and profits.