The credit history stores information about all loans and loans a person or company takes.
It shows what amount the bank issued and whether there were delays or refusals of banks.
Credit history is one of the documents the bank relies on when deciding to issue a loan.
It is important to understand that an individual entrepreneur is not a legal entity but the status of a person.
Therefore, an entrepreneur's and an individual's credit history is the same, and poor credit small business loans demand standard solutions.
What to do with the bad credit history:
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| Poor Credit Small Business Loans: eAskme |
It is no secret that bank employees evaluate a potential borrower according to several factors before deciding on the conditions and issuing a loan.
The most obvious is the presence or absence of collateral, the type of loan, and the method of its repayment.
An important factor influencing the bank's final decision is the borrower's credit history. It can be considered as a credit history of a legal entity and an individual who is the owner.
If it is really bad - there have been litigation cases, delays in payments, etc.- then interaction with any bank is complicated.
On the other hand, in modern reality, credit history plays a less important role than borrowers usually give it. The fact is that market relations in our country have developed quite recently.
Therefore, the fact that a person once took out a loan and paid it off in good faith does not give him much weight compared to someone who had difficulties in the future.
However, stains on your reputation cannot be a plus. However, this does not mean the money will not be given to you.
Banks do not aim to punish anyone - just working with you; they bear additional risks that need to be compensated somehow.
Ways to get a loan for a business with a bad history:
When contacting the bank, provide documents that justify delays in payments:
It can be almost anything that confirms that you have not paid on time in the past only because circumstances pressured you.
For example, the buyer did not pay you, which can be seen in the documents (contracts, acts).
It is important here not only to prove that you are not particularly guilty but also to let the bank employees know that you recognize past mistakes and make every effort so they do not happen again.
Secure your loan with collateral:
If there is any liquid property - vehicles, real estate - it can be used as collateral.
There are usually no problems. Sometimes, a business can also be used as collateral (more).
Contact the bank through a partner:
A very realistic way. If your close partner does not have such problems, then for a small percentage, he can get a loan for himself.
Of course, this is a matter of relationships and guarantees you can provide him.
Work through a loan broker:
This option is similar to the previous one.
A loan broker professionally selects and searches for loans, charging their interest.
Expensive but quite reliable - you can be sure that a professional will find the money for you.
How to dispute credit history?
If you already have a loan with overdue payments that you have not yet paid off to the end, then it is unlikely that you will be issued a new loan.
However, situations are different. For example, your story may have a mistake, so it's worth checking it yourself.
A credit history can be challenged if it contains typos, irrelevant and inaccurate data.
If you had a difficult period, you could not pay your loans on time but closed all the debts; your credit history is still ruined.
You cannot remove information from it. However, you may still be able to get a new loan.
To solve the problem, you need to turn to professionals.
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