Get a business loan with a bad credit score
One time you forget to pay that Victoria’s Secret purchase and your credit score drops a bit. Then you decide to pay out your car loan in full, which you think should be a good thing for your credit karma but oh no—your credit score drops even lower. “Good” changes to “bad” pretty fast. So now you’re stuck with 500+ score and god knows when it’s going to change. It gets even worse if you’re a business owner in need of funding because you might be a candidate for denial. However, you can still get a business loan with a bad credit score.
How bad is bad?
FICO defines the score as fair from 580 to 669 and very poor from 300 to 579. In other words, if your credit score is below 500, lenders won’t even bother to fund you. Why? A borrower with a bad credit score is at a high risk of default. Clearly, every lender wants your business to grow though he’s the one put at risk if he chooses to fund you. And you, as a business owner, should know that failing on payments may not only result in your background update accordingly but also in legal consequences.
How do you actually get a business loan with a bad credit score?
There’re plenty of financial services out there that suggest quick cash for business purposes or personal needs. The cash advance can be very useful, especially if you’re a business owner looking for funding so that the business can expand. But what happens when you shop around applying to multiple companies that provide quick funding? They all check your credit score and your full credit history. These inquiries appear on your credit report, indicating how many times you applied for credit. And now not only your credit score but also how many times you applied to money lending institutions matters in terms of getting your business funded.
What are the types of inquiries?
Two types of inquiries look just the same in the credit report, though one of them totally affects your score and the other does not at all. Just like a good cop and a bad cop trying to figure out your credibility.
A soft inquiry does not make your credit score go down; a hard inquiry will eat up points. You checking your credit score will not affect it, same as creditors checking your background, screening whether you’re eligible to qualify. You might even not know about soft pulls.
A hard inquiry shows up when you actually apply for any new type of credit with any type of loaner. This time, when your information on the credit report is being verified, it affects your score.
In other words, the more you shop around, applying for funding at different loan companies, the worse it is for your credit score. But if your credit score is bad already, it gets even worse, because at some point not only your future creditors are looking at your credit score but also at the number of loans you’ve applied for. This is an instance when the variety is no good.
What should I do?
If you have more than 3 inquiries in the past 5 months and you’re now looking for funding, there is a solution. First and foremost, what needs to be done is inquiry removal. All the hard pulls will go off your report within 48 hours with the help of Times Square Consulting. If you’re worried about your credit score—don’t anymore. Inquiry removal will fix it fast. And you’ll be able to get a business loan regardless of your credit score. By the way, here at Times Square Consulting, the minimum criteria for business funding is 500+ credit score.