Business

How can you boost your business credit score?

• Avoid relying on business credit cards. If the utilisation of your business credit score exceeds 30% of the available limit, then it may lower your business creditworthiness.
• Make an effort to improve your company's cash flow. The greater your cash inflow, the better your business liquidity and the lower the likelihood of EMI skips.
• Avoid submitting too many business loan requests at the same time. The credit bureau will view your company as unstable.
• If the loan EMIs from lending institutions cause your debt coverage ratio to exceed 50%, consider raising funds from other sources, such as angel investors or private equity.

When do you require a decent personal loan for business financing approval?

There are various instances when the lender gauges your personal credit score while approving funds for business purposes. These include.
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• If you apply for a personal or mortgage loan with the intention of using the borrowed funds for commercial purposes, your personal credit score will be prioritised.
• An individual credit score is vital when you are a start-up with no credit history and applying for a government loan scheme.
• When you own a small business that is classified as an MSME, your personal credit score is critical.
• Personal and business credit scores become crucial for loan approval if you are a sole proprietor or self-employed professional.

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Also Read: STEP BY STEP GUIDE FOR CHECKING YOUR CREDIT SCORE
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Conclusion

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Regardless of the type of loan product, your credit score is extremely vital. If you own a business and need money for it, you must ensure that both your personal credit score as well as your business credit score are excellent. It is always good to maintain high credit scores as it impacts many different facets of your finances.