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Get answers to commonly asked questions related to the credit score and credit reports
A business loan is a loan taken by an individual or an enterprise to start a company, expanding operations or emergency funds for daily business operations. Though the business loans for any existing company will not depend on the owner/proprietor or the board members, a business loan to start a new business will depend on the owner or group starting the business. This is because the company being new will not have any credit history. If the person/s borrowing have bad credit score, then the loan application might be rejected. On the other hand, the business loans for companies that have been around for some time the business loan will depend on the company itself as it will have a credit score and not depend in anyway on the owner/proprietor or board members.
1. Starting a new business
A person/s can borrow money to start a new business of their own. The money borrowed can vary based on what they want it for like buying a piece of land or leasing an office space or for initial working capital etc. The loan will be provided based on the credit score and assets available with the owner/s.
2. Expanding Operations
Buying land or leasing a property to expand business operations when you feel that your business has grown large enough and scaling up at this moment is an opportunity that you do not wish to forgo, a business based on its growth projections can go for expanding operations more than once.
3. Purchase Equipment
Technology has become a key driver in the information age of business, and since technology comes with a pre-set expiry date, there is always a demand to purchase or upgrade existing equipment and technology. Buying/leasing/replacing a new equipment that will help improve the production or operations of the organization, alternatively the equipment can also be leased, it is best to conduct a cost-profit analysis to determine whether to buy or lease. The advantage with buying equipment is that depreciation can be claimed each year apart from the first-year tax exemptions.
4. Purchase of inventory
Most often small business would require immediate capital for the purchase of inventory stock or raw material. There may arise the situation where the demand for your product may be very high in the market. Businesses may not have the funds to get the raw materials to meet the rise in demand. This problem can be solved when individuals and entrepreneurs take loans to buy the inventory needed for production.
5. To increase working capital
Many times, small businesses may not have enough working capitals to run their day to day activities. They will take short term loans till their own assets earn enough revenues to meet their operational needs.
6. Improve credit history
If a business is looking to get a larger loan it is necessary for the company to have a good credit history. To make sure of this the individual or proprietors get short term loans and pay them on time to improve their credit history. Consistent repayment of borrowings will lead to a positive credit history.
The business loan can be offered to any person who is running a legitimate business and has good turnover. Different banks have different criteria and terms to validate and authenticate a person’s business. After all the evaluation the loan amount, tenure and rate of interest or even whether to provide loan falls under the purview and authority of the bank. Some of the parameters taken under consideration are
Based on the person/s PAN or Aadhar card number and your credit history, the 4 credit reporting bureaus determine your credit worthiness and provide you with a score using various algorithm.
Ranging from 300 to 900 credit bureaus have five major components or categories.
1. Payment history – The most important factor. How regular you are on your loan payments
2. Amounts owed – Having very high debts or maxing out credit cards with dues continuing for many months will have a negative impact on your score
3. Length of credit history – The longer the credit history, the higher the credit score.
4. Credit mix – With different types of loans available (credit cards, car loan, personal loans etc.)
5. New credit – Taking out credits within short time increases your credit risk
Company credit report is which determines the financial status of a company or organization. It has details like
The best loan for any business depends on
If you are looking pay the loan using the full tenure, then choose the loan with lowest processing fee and interest.
If you are planning to repay the loan before the end of the tenure, then compare based on prepayment charges.
Secured loans are where the person/s when starting a new business can pledge any asset like gold or property that they have as collateral to get a loan. In the case of an existing company taking loan for any purpose can pledge any of it’s assets to acquire the loan. This is the best way for people or company with bad credit to definitely get a loan and at good terms.
Unsecured Business loans with Bad Credit
An unsecured loan is offered to individuals by the banks and NBFCs without any collateral. While it may be difficult to get an unsecured business loan for people with bad credit, it is possible with higher interest rate. Most banks reject your bad credit business loan application as they do not see your creditworthiness beyond credit score and credit report.
There are Non-Banking Financial Companies (NBFCs) that look at your creditworthiness by combining data and technology to approve the loan. They are more flexible with credit score and credit rating. Though the interest rate may be high, you may obtain an unsecured business loan based on your business plan proposal.
In the past, you may have failed to pay your credit card bills or loans which might have affected your credit score. This does not mean you become totally ineligible to get a loan. There are web-based lenders targeting individuals who need urgent funds with bad credit rating. The analysis of creditworthiness differ from the traditional banking system and the process is quicker and loans are approved and disbursed without any delay.
Request Your Current Lender
Another way of getting an unsecured business loan is to approach your local bank where you have the existing loan or credit card. Explain to the bank manager your situation, past mistakes and current business operations and request for an unsecured business loan with low interest. It can get you a business loan without much effort provided you display a promising repaying ability during the negotiation.
A CIBIL™ score is a three digit number between 300 and 900 that gives potential lenders a quick idea of your loan
Credit repair involves rebuilding your credit health to a level where you become eligible for loans.
A credit report is a history of your credit behaviour and contains detailed information on all your loan and credit
A credit rating - also known as a credit score - is a 3 digit number between 300-900 that gives potential lenders
A bad credit score is generally one that is less than 650. A credit score is a three digit number in the range of 300-900
Yes. In fact, a credit score of 850 is very good! Most lenders look for a minimum credit score of 750 to approve loans
There are several ways in which you can improve your credit score. Depending on how good or bad your score is,
Is 800 a good credit score? Yes. In fact, a credit score of 800 is very good! Only a small percentage of people reach,
Is it possible to obtain a free credit check or credit report? The answer is yes and no!
Your CIBIL™ Score plays an important role in getting loans and credit cards sanctioned, because it gives lenders
It is not possible for anyone, either lenders or borrowers, to get a CIBIL™ score or credit report for free.
It is important to know that there is no such thing as a CIBIL™ defaulter list. There used to be a defaulter list earlier,
There is really no number that can be established as the average credit score in India. Many people see regular
You can repair your credit absolutely free if you do it yourself! However, many people choose to get professional help
First, it is important to note that there is no ‘Defaulters List’ that is maintained or circulated by CIBIL™ or any of the other
Sourav and Ankit are watching the New York Marathon on TV and decide that they want to run a marathon.
In India, the best credit score to have is one that is 750 or above. The three credit rating agencies that operate in India
Is a credit score of 700 good? While it is not a very bad score, it is not good enough to automatically qualify
It is difficult to get a loan with a credit score of 650. Most banks look for a minimum score of 750 when deciding
It is not likely that you will get a loan with a credit score of 600. Most banks look for a minimum score of 750
It is difficult to get a loan with a credit score of 550. Most banks look for a minimum score of 750 when deciding
A poor CIBIL™ score can increase your financial problems and make it difficult to access credit, whether as a loan or credit.
One common worry that runs through your mind after you have made a credit card settlement is,
CreditMantri will never ask you to make a payment anywhere outside the secure CreditMantri website. DO NOT make payment to any other bank account or wallet or divulge your bank/card details to fraudsters and imposters claiming to be operating on our behalf. We do not sell any loans on our own and do not charge any fee from our customers/viewers for the purpose of loan application