SME business is considered as the backbone of the Indian economy as they have boosted the country’s economic growth. So, it is unfortunate that most of these organizations face a shortage of funds.
This is where you start looking for immediate funds and loans. Not only is it crucial to maintain a good credit score on an individual level but also for businesses; that way, business owners can easily avail SME Loans.
Pay off your dues on time
Your credit score is determined basis your payment history. You must repay all your dues on time, whether they are credit card bills or loan EMIs. This makes the credit bureaus and banks perceive you as credit-worthy and as a result elevating your credit score. On the contrary, late payments leave a negative effect on your score. A default like that stays on your report forever. Hence, it is essential to maintain a good repayment history.
Monitor your credit usage
It is important to understand your financial limits. Using too much credit shows lenders that you are unable to live in compliance with your income. Keep in mind your credit utilization ratio. It is recommended that your debt should not exceed your income. Cut down on your extra expenses to make sure you don’t surpass your financial limits. This not only saves you from falling into an unnecessary debt or a default lawsuit but also helps you with your score. Deal with your business credit usage smartly and do not involve in expenses which result in waste.
Borrow a mix of credits
A combination of credits helps you increase your credit score. This involves taking secured and unsecured loans and then repaying them diligently. Secured loans consist of car loans, home equity loans and mortgage. They involve collateral or security which the lender can take ownership of in case of a default. At the same time, unsecured loans like personal loans and credit cards do not have collateral to rely on. A good mix of credit paid off every month will boost your score like nothing else. Have a combination of both and establish a credit experience that will surely improve your SME loan eligibility and your credit score.
It is a smart move to include a guarantor to improve your loan eligibility. A personal guarantor will be obligated for your debts in case of a mortgage you cannot repay. Creditors will be much more glad to accept guarantors as they reduce the credit risk for them. It is more profitable to them than settling for foreclosure on a business property. This will help you in tough circumstances and help your company push out through the financial blow.
Regularly update your business information
As a business owner, you must ensure all your reports have the correct and most recent information regarding your business. Make sure you revise details like the number of employees in your business, size of the company, the number of years of operation and proof of financial statements like bank statements, balance sheets, etc. that can help you get a higher credit score and keep you away from any chances of bankruptcy or judgments that can badly affect your credit score. Apply online for instant business loans with Fullerton India. They provide easy loans with minimal documentation within 24 hours of approval.
All of the above tips do not show effect instantaneously. You need to plan carefully and be consistent with your effort, and over a span of 3 to 4 months, you will see your credit score get better.