Why is comparable credit so important in personal and business lending?
How Lender Use Comparable Credit.
When lenders evaluate your credit application for any type of loan they are going to look for comparable credit. What this means is if you have never had more than a $500 credit card you are not likely to get a $10,000 credit card limit. The jump is too high. However, if you already have a $5,000 credit limit card then you are far more likely to be able to jump to a $10,000 card assuming you have the other factors to support it.
Getting You First Large Amount Approval Is The Hardest.
The same is true in business lending. It is far harder to get approved for $100,000 the first time than it is the second or third time. And once you get approved for that first $100,000 business loan, then you find your mailbox filling up with $50,000 offers from auto dealers, computer companies, leasing companies, and credit card providers. You will be covered up with offers because that $100,000 business loan is now reporting to the business credit reporting agencies letting everyone know your business is creditworthy.
How do credit card companies determine approval limits?
In many cases, the more your stated income is (along with your credit score) the higher your approval limit will be. But here too comparable credit will play a factor. Because the approved credit limits on credit cards lower than business term loans, vehicle loans, or mortgages, banks will normally not ask for or do income verification. Be optimistic when estimating your income. This is not an encouragement to lie about your income on credit card applications.
The Major Factors In Getting Approved
Comparable credit and credit score are two other big factors. For credit cards, the magic credit score is 720 and above with having at least one or more cards already at $5,000 or above. There are other factors but if you have the income, scores, and comparable credit covered you are likely to get approved for $10,000 to $15,000 both personal and business credit cards.
A Quick Way To Establish Comparable Credit
One of the best ways to establish comparable credit is to take out a credit union personal signature term loan. Credit unions regularly give these out for $35,000 just by as it sounds, signing your name. Here too you can state your income and if you have 680 or above scores you can usually get approved. Once approved, take the funds and use them to secure a business credit card for the same amount with Wells Fargo or Bank of America. They both have a secured business credit card. The card will then report and you will magically have established comparable credit and again your mailbox will start filling up the other offers. Age both accounts for a least a year and they will help build your personal and business credit.
Inside the Level4Finance business success system, you will have access to step-by-step comprehensive business credit building instruction to obtain everything you need to build and maintain strong business credit scores and to pre-qualify for a spectrum of business loan programs.