Many start-up companies need money to start. It is often necessary to take out a loan, without it it is difficult to start a business, buy equipment or invest in new technological solutions. But what if you have a bad credit history? We will explain how it can affect your business and what steps to take so that everything in your company runs smoothly.
What is bad credit history?
The Credit Information Bureau collects all kinds of information about repayments. This is where all kinds of information about overdue payments over 30, 60 or 90 days are collected. This means that this order of delay, whether it is a loan, loan or installment, already creates a “negative credit history”. When applying for a loan, such unpaid arrears are of great importance.
Of course, in many cases, it is often said that it is better to have a credit history than not to have one at all, so you should avoid any backlog of any kind. The worst option is the lack of any history, for the bank such a person is completely unpredictable.
Can you erase an unfavorable credit history?
Many companies on the Internet advertise themselves claiming to be able to help people and companies who do not have the best credit history. Is this effective? In principle, all kinds of activities that such companies undertake, such as rectifying outdated and false information, submitting a request to restructure a loan or a request to prohibit the processing of personal data, we can submit ourselves.
It is really difficult for such companies to change anything, and we can do all the activities they undertake. Unfortunately, often various types of activities will not help, sometimes you have to wait 5 years before the negative information is removed from our account. Then all you can do is build a new good credit history. During this time, you can buy an item in installments, take a small loan and pay the installments on time.
How to help yourself
If you apply for a loan, a negative history can make a big difference. And it is not that we will not get credit at all, but that we will get it on worse terms. However, other obligations may be more important for the bank – credit card and account limit. Even if we do not use these facilities, it will constitute our debt for the bank. It’s a good idea to close your credit cards and remove the limit option. However, if we used these benefits in moderation, ie we paid the arrears on time, and we did not use the entire available limit every month, it could be additional information about the fact that we are a person who can control our finances.
And in advance you should think about it to make it easier for us to pay our debts. The best solution is a consolidation loan, which will allow you to pay all your liabilities in a way that will not unduly violate our budget. It is also a good signal for the bank that we can anticipate certain circumstances in advance and we do not fall into a spiral of debt, and we are trying to find the best solution.