Starting a new business is daunting at the best of times, but when you need to consider a loan in order to get set up, it goes to another level.
Funding is such a vital part of getting set up for product businesses; buying stock, renting premises etc. but it can feel that lenders are holding back, making you doubt whether or not you want to continue on the journey.
At Streamlion, we’re really proud of our high success rate when it comes to getting start-ups off the ground but there is one area that prospective business owners can do to really maximise their chances of success.
Making sure you understand your credit history and your credit score.
What does that mean?
Your credit history and credit scores are vital pieces of information that lenders use to understand your financial wellbeing.
They tell the lender a lot about you – how well you have repaid debt in the past, if you have missed any repayments on mobile phones, utility bills, rental/mortgages and also how much you owe other people.
Lenders will never want to add more debt to your burden, so they always make sure you can afford the loan repayments before approval is granted.
Your aim is a fair to good credit score. So, before you start looking for any funding, it’s worth looking at your credit score to make sure you won’t fall at the first hurdle.
What do you need to do?
You can check your credit score using one of these sites.
All three of the above allow you to carry out a free check on your credit score.
An Experian credit score is out of 999. ClearScore credit checks are out of 700 and Equifax are out of 850.
All these will tell you what it is and how it compares to the national average. A healthy credit score means you can apply for any funding you want with confidence. This tends to be a score that is fair to good or above.
The website will also give you guidance on areas that need attention.
What happens if my credit score is Very Poor or Poor?
The good news is that you can do something about it.
When you get your credit score, you will be able to download your credit report as a PDF. This will give all the detail you need to help you understand what has influenced your score.
The sorts of things that can negatively affect credit scores are:
- Late or non-payment of bills
- Being close to credit limits on overdrafts or credit cards
- Too many ‘hard’ credit checks – these are checks carried out by lenders & creditors in the past
- County Court Judgements (CCJs)
Whichever company you use to check your credit score will be able to help you to improve the score. Just get in touch with them directly.
And ongoing? What to do……
It’s good discipline to check your credit score every month. Many of the websites will offer the chance for an automated update to be sent to you. This means you will know of any issues at an early stage and can take action to remedy them.
Then as soon as you’re ready, you can apply for the funding you want with confidence and achieve your new business dream.
Streamlion specialises in helping entrepreneurs starting on their business journey. We help you create a business plan and finance details which ensures that your loan application will be successful. We can give you the peace of mind that you haven’t missed anything with your loan application by acting as your trusted business advisor.
If you’re interested in finding out more, contact Helen via firstname.lastname@example.org or call 07790 493033.