Benefits of Credit Reports to Securing Business Loans
As you familiarize yourself with the realm of credit scores and how they serve as a pillar to obtaining loans, it’s also of key benefit that you’re equipped with the knowledge of credit reports and how loans lenders and financial institutions use this as a measure to gauge your ability to pay back loans.
What is a Credit Report?
A credit report is a detailed analysis and summary of your credit history and your current credit position. It’s an overview of your credit history like your repayment ability, loan history, and status of your loan accounts.
A credit report contains your financial accountability to pay back loans, and how and when you pay back loans.
Just like a school report card provides a breakdown of academic performance, a credit report provides loan lenders and financial institutions with an applicant’s general credit performance.
Credit reports contain information but not limited to name, date of birth, address, phone number, unique identification number, type of credit accounts), credit payment limits and balances, credit performance, credit score, and other public records.
How To Get a Credit Report
In Nigeria, licensed credit bureaus issue your credit report once in a year for free. Credit Bureaus are credit reporting agencies that collect and store financial data about an applicant for loan lenders and other financial institutions to assess before issuing loans.
Benefits of a Good Credit Report
Loan lenders carry out credit checks on applicants only through a credit report. Hence, it’s a critical factor to maintain a good credit report.
A simple way to achieve a good credit report is to pay back loans on time. It demonstrates your financial ability and credibility as a business owner and it mitigates risk on the part of the lender.
Here are some benefits of a good credit report:
- Reflects Integrity: Integrity is a trait some businesses lack when sorting for loans. By upholding integrity by paying loans at the agreed upon terms, loans lenders have no fear when issuing you loans. It has a positive impact on your credit report which opens doors for better loan terms.
- Secure Collateral-free Loan: When your credit report reflects a positive credit standing, you have access to collateral-free loans from lenders. Hence, you pose as a risk-free entity to them. This also builds trust and offers you flexible repayment terms.
- Lower Interest Rates: A positive credit report allows you to negotiate reasonable interest rates when taking up loans. As lenders analyze your credit history, they reward good credit reports with lower interest for higher loans.
- Ease of Access: Compared to the frustrating effort of convincing lenders with a poor credit report, you gain easy access to loans with a good credit report. Lenders can see your creditworthiness by reviewing your credit report and issuing you loans hassle-free.
- Make High Value Purchases with Credit: A good credit report gives you the opportunity to purchase valuable items like houses, cars, and business equipment without paying cash or going through the turmoil of saving.
It’s important businesses check their credit report regularly to ensure all information is up to date and correct. They can further assess their credit situation to know which credit opportunities are available to them.
To learn more about credit reports, kindly reach out to your account manager. For further assistance, contact us at help@getprospa.com or call 018890240.
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