Keywords: business loan EMI, loan for new business, easy business loan
Are you a startup owner looking for an easy business loan? Starting a new business is exciting and a daunting task at the same time. Getting a business loan helps to give a kickstart to the business, helping entrepreneurs expand their operations, cover day-to-day expenses and buy new inventories. Amongst everything, credit score is one of the most important factors lenders consider while reviewing your application.
What is a credit or CIBIL score, how does it impact your loan application, and how can you improve it? This article will answer all your questions to help you better understand the CIBIL score and get favourable terms on your business loan.
What is a Credit Score?
A credit or CIBIL score is a numeric representation specifying your creditworthiness. This score typically ranges from 300 to 900 and is most preferred by lenders to assess your credit history, financial behaviour, and repayment patterns.
Having a high credit score (potentially more than 700) helps to increase your chances of getting a quick loan for new business within favourable terms without any hassle.
Importance of Credit Scores for Business Loan
Here are several reasons to help you understand why CIBIL scores are important to get a business loan:
- Approval Chances: A high credit score increases your chances of getting quick approvals on business loan applications. Lenders are more likely to prefer those who have a solid credit history.
- Loan Amount: A strong credit profile can help you apply for a higher loan amount, giving you the flexibility to expand your business operations.
- Interest Rates: Lenders may charge a lower interest rate to applicants who have a higher credit score, which ultimately reduces the cost and business loan EMIs.
- Repayment Terms: Terms are stricter and more rigid for those who have low scores. Specific terms like repayment tenure and additional fees are changed to provide more flexibility to applicants with higher scores, making loan approval convenient.
- Growth Opportunity: A good credit score allows entrepreneurs to increase their growth opportunities by opening gates to different credit options. They even attract new investors to fund the business.
How to Check Your Credit Score?
To check the credit score, here are steps you can take:
- Use online platforms that offer free CIBIL score checks.
- Visit the official CIBIL website, sign up by providing your details and navigate to the form section to get your credit report.
Steps to Improve Your CIBIL Score
Follow the below tips to get an easy business loan:
- Pay your credit card bills, utility bills and EMIs on time to affect your score positively.
- Avoid applying for multiple loans at once in a short period of time.
- Use no more than 30% of your credit limit to ensure responsible management.
- Regularly review your credit report, analyse everything, and ensure you rectify any errors, as these can negatively impact your credit score.
- Avoid making too many credit inquiries within a short period of time.
- Clear off your existing debts to ease the financial burden off your shoulders and get quick loan approvals.
How to Choose the Right Business Loan?
Choosing the right funds is a primary step you can take to get a loan for new business:
- Assess and analyse the amount of credit you want to take to avoid overborrowing and underborrowing funds.
- Choose a trusted lender that ensures transparency and easy terms and conditions.
- Compare the terms and rates of interest charged by different providers to choose the one that best suits your needs.
- Before applying, improve your credit score to get a loan at a lower interest rate to reduce your business loan EMIs.
Final Thoughts
It is concluded that credit scores significantly impact business loan applications as they determine your creditworthiness and how efficiently you can repay your loans. While researching, make sure you apply through a secure and reliable platform, like Bajaj Finserv, which promises a seamless loan experience, provides flexible tenures and charges no hidden fees, helping you with an easy business loan.
With careful planning and improved CIBIL scores, you can conveniently apply for a loan and achieve your business goals.
