Your Personal Credit Report and How you Look to Lenders.

Your personal credit report is so important to lenders. They often base their entire decision on it.


Your Questions

What can I expect lenders to focus on when I apply for an unsecured business loan?

What is the Debt to credit ratio and how can I improve mine?

Real Answers

What can I expect from lenders if / when I apply for an unsecured business loan?

Expect them to focus on the Personal

  • Credit Report and
  • Credit Score.

(Unless of course you’ve built your Business Credit :-).

Lenders look intently at your credit report for what is called your Debt to Credit Ratio.

What is the Debt to credit ratio and how can I improve mine?

It’s a ratio that compares how much money you can borrow to how much you are borrowing.

To win lenders over, make sure you are spending between 10% – 30% of your available credit month after month. Why this magic number?

Why the 30% Maximum?

The max of 30% is because lenders want to see that you don’t really need the money. If you’re spending 100% of your available credit, it’s a clear indicator that you NEED money.

Did you know that lenders assess risk and are experts at determining if a person or business desperately needs money? The more you need the money, the less they want to extend it. Because history shows that need = risk!

Plus, what if you run across hard times? It's happens to all of us at some time or another. If you’re already borrowing all the money that you possibly can now what resources will you have at that time?

Not to mention that if they choose to extend credit you’ll now be obligated to pay back more money to more lenders. Each lender's biggest fear is that during hard times their’s will be the loan defaulted on.

When you maintain the 30% maximum, they see you as a reasonable and responsible person who can handle larger amounts of credit.

Why the 10% Minimum?

The reason for the 10% minimum is because lenders are in the business of making money. If you don't borrow any money then you won't pay any interest.

Their dollars will no longer be earning them money. But will instead be sitting idly by under your control.

If it looks like you’re the kind of borrower that won't borrow any money at all, they'd rather lend to someone else.

When you maintain the 10% minimum, they feel they can build a profitable relationship with you.

So keep the 10% to 30% rule in mind. Do it and watch your credits score soar to new heights.

This step alone could get you a vault full of unsecured business loans.

P.S. Click here to learn more about how to improve your personal credit score.

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