4 Reasons Why You Should Improve Your Personal Credit Score
Are you planning on taking out a loan to buy a home, open a credit card, or pay for school sometime in the future? Whether it be for your education, real estate, or a new business start-up, good credit is necessary if you want to borrow money. A positive credit score can open more doors to attractive financial opportunities for you allowing you to apply for a home loan, car loan, or even a business loan from SBA Seattle.
Related: 6 Facts You Need to Know About SBA Loans
Many may not know this but, employers and other companies usually perform a background check on a person they’re planning on hiring or working with. This can give them an idea on how responsible the person or business is in handling their finances. With that, the poorer your credit score is, the lesser your chances are at employment or in gaining investors.
4 Reasons You Should Improve Your Credit Score
Regardless of your past credit history, here are four reasons why you should take actionable steps to improve (or start building) your personal credit score:
1. The Purchase of a New Home
There’s a lot of thought that goes into purchasing a new home – the location, the realtor, the total cost of your home, as well as numerous other things. If you’re looking to invest in real estate, it’s crucial to raise and improve your credit score when applying for a home loan. Keep in mind that the higher the credit score, the lower the interest rate, the better it is for your bank account.
2. Starting a Business
More often than not, aspiring business owners need working capital to start their new business venture. While borrowing money from friends and family is an option, many would-be entrepreneurs prefer to take out a small business loan.
Potential lenders factor in your personal credit score and history in order to determine if you’re eligible for financing. Whether you’re starting a business from scratch or expanding your existing one, your personal credit score will greatly affect your business loan applications. Generally, more complex and comprehensive business loans require business owners to have a personal score of at least 560 or higher. If you don’t have this, your chances for approval may be lower. Aside from that, banks may not approve your loan application if you have a low credit score.
Related: What to Consider Before Starting Your New Business
3. Getting Better Interest Rates
While good credit is important in securing financial assistance, many private sector lenders are still willing to fund people with bad credit. However, with poor credit comes more documentation and higher interest rates. This is how banks and other private lenders balance their risk of lending money to people with poor credit. On the part of the borrower, it becomes a heavy financial burden.
Lower interest rates mean more savings in the long run, so make sure to keep your credit score under control. You can improve your credit rating by making house and car payments regularly and on time, paying off your credit card or SBA Seattle in full every month, and paying off current loans before the loan period ends. Be sure to check you credit report now and then, too, if you can. Credit bureaus often fail to record your timely payments. If you spot an issue with your credit report, be sure to contact the credit bureau immediately to fix it.
4. Buying a Car and Applying for an Auto Insurance Policy
Cars are a common purchase among Americans, and most of the time, people take out car loans when buying a vehicle. People with poor credit can still obtain financing since car loans are typically for smaller amounts than are house loans. With poor credit, you can be certain that financial institutions will charge you higher interest rates and require larger down payments.
After buying your new vehicle, you will need to apply for an auto insurance policy. This will cover you in case accidents or natural calamities damage or break your car. Most insurance companies now consider your personal credit score when determining premium payments. So be sure to get your credit report sorted out to maximize your auto loans and auto insurance policies.
SBA Seattle: Small Business Loans for You
Your credit score will play a part in every financial aspect in your life. Whether you’re planning on buying a home, car, or applying for personal or business loans, you can be sure that the institutions will look at your credit background first before doing business with you. If you’re looking to start your own business, a good credit score will help you save money in the long run.
SBA Seattle helps small businesses securing long-term business loans. If you run a small business, an SBA loan can give you adequate working capital to cover your start-up and operation costs. You can also apply for an SBA loan to purchase expensive equipment. No matter what investments you’re planning, you can trust SBA loans to provide you with the cash needed to bring your business to success.