Success is achieved through perseverance, effort, and hard work.
Another key aspect of accomplishing your goals is through investments, both in time and money. Unfortunately, it is tough to consolidate savings funds to develop large projects. It is enough to mention that 70% of Americans have less than one thousand dollars in their savings accounts, according to GoBankingRates data.
Financing is the perfect tool and ally for growth, it allows you to invest larger amounts and pay gradually, according to your needs and possibilities. However, the requirements of banking institutions become one of the biggest problems for entrepreneurs. Most banks ask for good credit history and a good credit score, but how to achieve this if I have never had credit?
Here are some strategies and good practices to consolidate a credit score. By doing so, you will apply for the best small business loans according to your financial needs.
Best ways to obtain and improve your credit score
The first point is to keep in mind that building a good credit history is a process; You won’t do it overnight or by magic. With good practices (necessary for this purpose), your score could be within a positive range, translating into greater confidence for financial institutions to approve new financing. Consider these tips to get started and improve your credit score.
Get a secured credit card
This type of card works in the same way as any other credit card, with the difference that to obtain the line of credit, you must deposit in advance to the account. In this way, the institution feels more secure as payment is guaranteed.
Apply for other credit cards
Another credit card type is those you can access without credit history and granted by department stores or other Fintech institutions. This financing alternative usually has high-interest rates; use them only to direct debit your expenses and pay the total amount each month without generating interest. This way, you will improve your credit history, using the money you are already paying.
Get a Credit-Builder Loan
These are loans granted by Credit Unions (financial cooperatives), the intention of these financial products is for you to build a healthy credit history. They give loans from $300 to 1,000 dollars deposited to an account that will be blocked until you finish paying the amount. This is a nice choice if you are not very disciplined in your payments since it is a way to force you to comply. One of its advantages is that it helps you generate good financial habits and build a good credit history.
Get a joint account or a loan with someone who has a good credit history
Help from friends or family can be your best ally. Open a bank account or a joint loan with a person with a good credit score. Keep in mind that if you are late on payments, it will affect the other person’s financial reputation.
The relevance of having an excellent credit score
Having a good credit score will open the door to all financial institutions and allow you to obtain financing to achieve your personal and professional financial goals. It is important to consider that, although the credit score is one of the essential requirements to get small business loans, some institutions may request a social security number, bank records, and even a letter of ownership of the company.
Other financial institutions, such as online lenders, are friendlier to small businesses and offer financial products with simpler requirements, competitive fees, and interest rates.
Recommendations before applying for financing
By carrying out good practices to build your credit score, you will have the possibility to apply for financing to create personal or business wealth. Before requesting any type of credit, analyze the purpose for which you will use the money. Generate an accurate budget and add 10% for emergencies, so you will be ready to start the adventure. Small business loans should be handled with order and discipline, paying in time and form will generate a healthy relationship with your lender.
The lack of access to credit should not limit the growth of any person or business; there are several possibilities for all kinds of needs, do not be afraid to investigate and achieve your goals. Immediately implement these actions and build a healthy credit history that will allow you to empower your talent.