Running a small business can be exciting, but it can also be stressful when things go awry. A major business equipment failure or a flood could temporarily shut down operations until you can clean up the mess. Making sure your credit information is current, and in good shape, gives you easier access to banks offering small business loans.
Banks want to lend money to clients with good to great credit rating. So take a look at your credit status and see where you stand in the lending mix. Depending on what you find in your credit information report, you can either relax or take action to improve your credit rating.
Getting Startup and Expansion Funds
Whatever stage your business is in, you can always use more funding to cover things like equipment purchases, supplies, rent, and employee payroll. Banks are ready to hand you the money, but only if you’re creditworthy in their eyes. In addition to loans, your credit status determines whether you can apply for and receive business credit cards and other convenient perks. Do you qualify? Your credit information report will reveal the answer.
What’s in Your Credit Information Report?
As soon as you apply for credit or a loan, banks and lenders pull your credit information report (CIR). This concise report contains your credit history, including details about any late payments made to companies and lenders. It also includes your current credit score. After reviewing your report, a final decision is made on acceptance or denial of your application. Since crucial decisions are made based on what’s in your CIR, you’ll want to get your hands on a copy to see if all the information is accurate.
How to Get Your CIR for Free
India’s transition to a business-friendly environment means you can order copies of your CIR for free. This is a good thing because there are four major credit reporting bureaus producing reports: Credit Information Bureau India Ltd. a.k.a. CIBIL, Experian Credit Information, High Mark Credit Information Services, and Equifax Credit Information Services. You can order a free CIR on each of these websites, and be sure to have your PAN card, passport, or other official ID on hand. You may also be required to submit supporting documentation such as credit card numbers and mortgage statements. Most CIR reports are sent within 48 hours of submitting a request.
Reviewing Your CIR
After receiving your reports, reserve some time to sit down, relax, and carefully review each one. Never assume they’re 100% correct. Mistakes happen, and your reports may contain errors that impact your credit status. If you find errors, document them in a letter to the credit bureau. Once alerted, bureaus have the responsibility to fix these errors and update your information. If everything is fine, except for a low credit score, you can take steps to improve it.
How to Improve Your Credit Score
If your credit score is in the bad to fair range, you can boost it into good or great range by following a few simple strategies:
- Take payment due dates seriously, and vow to make all bill payments on time
- Make sure you have plenty of money in the bank to cover cheques
- Avoid overdrawing your bank account
- Avoid opening numerous bank or credit accounts
- Make sure payments clear before going on holiday
By following these tips, you can, over time, completely turn around a negative credit report situation. Paying attention to your credit information report can make a big difference to the growth and prosperity of your small business. A CIR in good standing can help you secure a much-needed small business loan.