Does your business need new equipment? Are you just starting out in the construction industry? Or are your current needs growing? Perhaps you simply need to update current equipment. Whatever the reason, heavy machine financing is a great solution to help you get the equipment you need to succeed. While working with a broker will make the loan application process much smoother, you can also improve your chances for approval. The most important factor when applying for heavy machine financing is your credit score. Here are five ways to improve or maintain a good credit score so your heavy machine financing application is approved.
Paying bills on time: one step closer to getting approved for heavy machine financing
When you apply for a business loan with a financial institution, both your personal and business credit score will influence approval. A bank will look at your personal credit score when deciding to approve your heavy machine financing application. As such, you should pay both personal and business bills on time. Not only will you avoid interest fees and penalties, but it also shows banks you are reliable. In fact, your payment history is crucial to your credit score. Paying bills on time is by far the best way to build your credit history. While paying in full and on time can be challenging, you should always pay the minimum amount. Late payments can leave a trail for up to six years!
Keep your credit utilization low if you are applying for heavy machine financing
How much credit you use can affect your credit score. In fact, the amount of credit you use to run your business is seen as a predictor of default risk. As such, you should try to limit your credit use to less than 10%. Most importantly always pay back credit on time. In general, the less credit you use the better.
Limit the number of credit cards you have and credit applications you make
Credit bureaus will examine your borrowing history and debts. Having multiple credit cards can negatively impact your credit score. Especially if you are using one card to pay off another. Similarly, making too many credit applications at the same time could influence your credit score. If too many lenders are inquiring about your credit score, red flags may go up. As such, only apply for the heavy machine financing you need and believe you will be approved for. However, you can check your personal or business credit score without the risk of lowering it.
Check your credit record regularly
That being said, you should check your credit score on a regular basis. In Canada, you can obtain your business credit report from Equifax, TransUnion and Dun & Bradstreet, while you can obtain your personal credit report with Equifax and TransUnion. We recommend checking your report regularly to ensure all the information is correct and up to date. Most importantly, it will let you see if you have been the victim of fraud.
Separate personal and business credit
Last, keep personal and business loans separate. For example, your heavy machine financing application should go through your business account. You should finance heavy machinery through business loans or leasing. Try to avoid using personal lines of credit at all costs. Proper management of your company’s expenses will secure a good credit rating and improve your chances of loan approval.
These are a few simple things you can do to improve your credit score. Remember the earlier you start building good credit the better. Debt collection and bankruptcy will obviously negatively impact your credit score. And it can take a long time to rebuild a good credit rating. For all your heavy machine financing needs, consult an expert broker at SFL Leasing Group today. They will find the right financing solutions for your particular needs.