Many people borrow money for a number of reasons. Some borrow money to deal with an emergency, while others take out a loan to finance a new venture. Whether you’re obtaining a loan due to an accident or in a situation where your business may require a loan, it is vital to keep in mind that your ability to borrow is determined by many factors, one of which is your credit rating.
Credit rating is a term that is often used interchangeably with credit score, but these terms are not the same. Credit rating measures the ability of a business or organisation to repay its debts by checking its history of borrowing and repaying its financial obligations. Credit score essentially does the same thing, except that it measures individuals instead of businesses.
If you are a business owner planning to take out easy cash loans for your business, read on to learn more about credit rating and why having a good one is essential!
How does credit rating affect a business’s ability to borrow?
As mentioned earlier, credit rating represents the risk level a business poses to a money lender if and when a loan is granted to it. It likewise shows the organisation’s ability to manage its loans and credit cards. In essence, the poorer your business’ credit rating is, the fewer chances you have of getting a loan for small and medium-sized enterprises (SME) financing.
Your business’ credit rating may fall somewhere between the best score of 2000 and the worst score of 1000. There are numerous factors that can affect your credit rating, such as your personal information, repayment history, number of credit enquiries, financial stability, and any history of loan defaults. This credit rating will be derived after your credit report has been examined by the Credit Bureau Singapore (CBS).
Why does having a good credit rating matter now and in the long run?
Having a good credit rating ultimately has a short-term and long-term effects. As such, you should always try to improve your credit rating so that you can easily secure SME financing and obtain the business loan you require. Here are some of the reasons why having a good credit rating matters
1. Higher chances of loan approval
This is not just applicable to business loans – having a good credit rating will make it easier to obtain fast loan approval in Singapore. The reason behind this is straightforward: With a healthy credit rating, money lenders will see you as a more creditworthy borrower.
2. Higher loan quantum
Besides being more likely to get approved for a loan, you may also have higher chances of increasing the amount you can borrow when you have a better credit rating. This will provide you with more things to work with when you are trying to acquire working capital or buying inventory for your business.
3. More options to choose from
A favourable credit rating makes your loan application less likely to be rejected. This means you will have more options to consider and the ability to choose between different offers and interest rates. Simply put, you will no longer have to settle for whatever is willing to extend a loan to you or your business.
Conclusion
Building and maintaining a good credit rating is necessary to increase your business’s chances and ability to obtain loans, as a poor credit rating could prevent you from borrowing any money for your business. This can potentially hamper your business’ success, especially when faced with challenges that require additional financing. Hence, taking care of your credit rating is of utmost importance.
Should you need reliable financial assistance to meet the requirements of your business, Orange Credit is the money lender you should work with! We offer a variety of excellent and trusted loans for every need, from personal to business loans. To learn more about how we can help solve your financial problem, feel free to contact us today.
