5 Steps To Become More Lendable
What’s up family? This is your boy Ivan Hall, the credit King. If you’re anything like me, the reason you want good credit is that you want to be able to borrow money to take advantage of business opportunities and investments. Anything else is criminal.
Today, I want to give you five easy steps that will make you become lendable. Follow these steps and put yourself in a position to receive money anytime you want it. The past is important. Be aware of your credit history.
- It is important to have activity on your credit accounts to gain lendability, maintaining existing accounts is necessary to keep an active and positive profile. Those who do not have history can accelerate their credit growth by strategically opening accounts. Use your cards for a small purchase and pay them off before the billing due date. Even one transaction once in a while can prevent seasoned accounts from being closed due to inactivity.
The lenders don’t want the credit to go to waste, but they also don’t want you to use all of it, there is a delicate balance by using once you’ve gotten within reason the lenders will see the need to give you more. If you aren’t utilizing any of your accounts, the lenders will not see a need to approve any additional funding.
Negative items will negatively impact your scores and lendability. Remove them by disputing any late payments, collections, and other derogatory items on your report. Be mindful of debt collectors as they can report the same account multiple times as the debt gets sold to multiple agencies causing your scores to drop drastically.
If you have a minor late payment 30 days or less with a creditor but have otherwise had a solid history, you can contact the creditor directly and ask if they can remove a late. Not all lenders will do this, but many would rather work with you to remove the late and lose your business altogether.
Never pay a collection account unless you first contact the original creditor. If an account has been passed through multiple collection companies find out who currently owns the debt. And make sure to always get written confirmation when a debt has been paid.
Verify that all of your personal information is correct. update any incorrect information on your reports such as previous addresses, telephone numbers, social security numbers, and reported occupations to avoid future issues. All it takes is one busy cashier at a department store to enter a misspelled name or wrong social and it will show up on your credit report. You can access a free credit report every year through annualcreditreport.com
- For more active monitoring, you can utilize a free service like Credit Karma, these minor changes and updates can help to significantly boost your credit scores just by doing a little housekeeping balance are key. Be mindful of your balance to limit ratio.
Rule Of Thumb
The industry rule of thumb for personal credit cards is never to carry a limit to balance ratio above 35%. For example, if you have a personal credit card with a $10,000 limit, your balance should not exceed $3,500. Balances over the 35% ratio will begin to drop your credit scores and lenders will focus on the high debt if you are going to make a large purchase or carry a large balance on an account make a big payment.
Lenders like to see more than the minimum payment made on large balances in what they call aggressive payments. The 35% rule does not apply to business credit. However, with a few exceptions. Most business credit lenders do not report the business accounts to your personal credit report. This is so that you can utilize the business credit freely without being penalized for running your business. Lenders understand that for businesses there will be higher balances and a larger number of transactions.
If you do that with your personal accounts, the lenders see it as high utilization and lending risk. lenders don’t want you to overextend yourself and if you are maxed out on your personal accounts and applying for more credit, it will appear you are doing just that.
Pay Early
To put it another way, make sure it doesn’t look like your ship is sinking. Ensure payments and balances are reflected properly by paying your personal credit card bills a week before the cycle due date. Sometimes if your due date is close to the end of the month. Payment may not be applied until after monthly reporting to the credit bureaus occurs.
You can also call the lenders and ask when they report to the credit bureaus to know when you need to make your payment by the credit lenders make your due date close to their report date so that they can try to report the highest balance on your account to the credit bureaus. This will make it look like your debt is more inflated than it really is and lower your credit scores.
By finding out when the accounts are reported, you can sidestep this landmine and keep your debt ratios in check. Recognize that lendability for business credit is mostly focused on your open revolving credit accounts, not installment loans or mortgages.
Even store credit accounts and authorized user accounts can be ignored by lenders, so it is important to have established personal credit accounts of your own to qualify for dollar 25k dollar 500k of 0% business funding you need active open credit accounts on your report the amount of time an account has been opened as referred to as seasoning.
It is best that your accounts have at least one year of seasoning. This shows longevity and the ability to maintain credit over a long period of time. Both personal and business credit lenders like to see along seasoning to show that you are a responsible credit user.
The credit bureaus will tell you what they think is wrong. Most credit monitoring sites will provide an overview of what factors are impacting your credit scores. A tri-merge credit report will list codes that the credit bureaus list along with your credit scores to show what is making the biggest impact in the factoring of your score.
Continue to part two………….