Opportunity: Your business is doing well and you have an opportunity to expand, improve operations, add new equipment, buy product, or upgrade your facility, etc. but you need capital to do this.
Action: You reach out and apply to several lenders, perhaps a business finance broker or two.
Problem: Every lender applied to and all the sources the broker sent the file to request a personal and business credit inquiry, resulting in a decrease of your FICO score, in some cases substantially.
A large amount of inquiries may contribute to a lowered FICO score. Below is a recent example how many inquiries can be made when searching for funding.:
A credit inquiry occurs when a lender, leasing, finance or advance company authorized by you checks your credit history with the credit reporting agencies. There are two types of credit checks, a hard inquiry and a soft inquiry. A soft credit inquiry will not have a damaging effect on your credit score. Hard inquiries, on the other hand, can have a negative impact when there are several requests within a short period of time.
Why does a hard credit inquiry harm your credit score? According to myFico, multiple hard credit inquiries indicates that you are opening multiple new lines of credit, which is considered a risk factor. Multiple credit checks don’t always mean that you are pursuing multiple lines of credit, but, that is the signal that is received.
When you apply for a business loan, lease, line of credit or advance with Capital Partners Network, we assess your credit profile before placing your file with any of our 130+ lender relationships. Our goal is to provide you the “best fit,” placing your file only with lenders we believe you will qualify with and that can meet your borrowing needs. The lenders we submit your file to will ultimately have to review your credit but because these lenders were chosen specifically based on your needs and credit history, we receive a very high percentage of offers and approvals.
By seeking business funding through Capital Partners Network your business can get the capital you need without unnecessary and damaging credit pulls.
Whether you are working with CPN or any source come prepared and ask questions.
· Know your personal score: nearly all lenders will be seeking this, you can get your scores and credit history from one of the free credit sources or by going to www.usa.gov/credit-reports and clicking on the Annual Credit Report link or request form. Under the law you are entitled to a free credit report from each of the three credit reporting agencies (Equifax, Experian, and TransUnion) once every 12 months.
· Know your numbers: business operating results, debt outstanding, and capital you are seeking and the use of those funds, and your projected return on investment (ROI).
·Ask questions: ask about the qualifications for approval, what borrowing options and products are offered, what lending or funding amounts are available, the typical terms and fees associated, what the process will be - will one source be reviewing, or multiple sources, if so how is the file vetted and placed? These are great questions to have ready when pursuing funding for your business.
Few things can dampen a great business opportunity more than struggling with multiple wrong lenders or finding out after the fact that your credit has taken a hit while pursuing funding. Working with a CPN Affiliate can help you avoid the negative consequences of multiple hard credit inquiries. Contact us today to begin the process of achieving your goals.