If you’re planning to run your own business but you have a poor credit rating, this can make it much harder to get a loan from banks and other mainstream lenders. Thankfully, there are various other ways that you can secure a loan, helping to repair your bad credit so that future funding will be much easier to obtain.
While there are funding alternatives to check out, your first port of call should be to start repairing your bad credit rating. If you don’t know your credit rating, you are not alone. With research carried out by YouGov suggesting that only ¼ of the UK’s population know what their credit rating is, it’s crucial that you check yours out so you can work out what to do next. To help you get the funding you need, here are a few things you can do to start a business with bad credit.
Understanding Credit Scores
A credit score puts a numeric value on the creditworthiness of your business. Like with anything, the higher your credit score is, the more chance you have of your business being approved for a loan. Your credit information is gathered and kept by the CRAs (credit reference agencies) with the three in the UK being Experian, Equifax, and Callcredit.
Know Your Credit Rating
Before you apply for a loan, it’s important that you check your credit score first with all three CRAs in the UK. While it’s free to check your credit score, you may have to pay to be able to access your credit report. You may find that there is a free one-month trial that you can take advantage of too. You also have the option to view your credit report online at a cost of £2.
What Affects Your Business’s Credit Score?
Your business’s credit score is worked out by taking several factors into account such as: a county court judgement which CRAs will look at to check how many you have and their current value when assessing whether you’re eligible for credit; winding up orders which can affect your business finance application; financial performance which CRAs will examine to establish your company’s net worth and whether your business has a healthy amount of money in place; as well a director’s history check to see whether you’ve had previous companies before, and if you’ve been linked with other businesses that have failed.
Where to Find a Loan
If you’re in need of a loan for your business, and you’ve been turned away from mainstream lenders, you may want to consider visiting a loan finder service where you can be approved for a loan bad credit UK. To work out your repayment schedule, you will need to input how much you would like to take out and the duration of your loan.
Final summary
Understanding what credit ratings are, knowing your credit score, as well as identifying what can affect your business’s credit score will help when it comes to improving it and increasing your chances of being approved for loans in the future. If you’re in need of urgent cash, you may want to consider taking out a bad credit loan for your business.
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