Obtaining the funds to being your carwash may be one of the most boring and stressful parts of the process, but it is also one of the most important. Most entrepreneurs don’t have stashes of cash built up to open their businesses, so they rely on startup loans. If lenders see carwash owner hopefuls as high-risk, however, the dream of opening a carwash may be gone, or at least stalled.
According to the Santa Fe New Mexican, “While the score is only one metric of financial stability, it can determine whether the business gets the loan at all, how much it can borrow and what interest terms it can expect.”
Business owners should be aware of their scores and fix any issues before they apply for loans. Bills should always be paid on time, and professionals can get help them manage money, states the article.
Lenders look at Fair Isaac Corp. (FICO) scores to determine whether they should approve loans, notes the article. Five elements make up the score, which are assigned different percentages to make up the total number. According to the article:
- Payment history represents 35 percent
- Total debt accounts for 30 percent
- Length of credit history is 15 percent
- New credit accounts are 10 percent
- Types of credit are 10 percent.
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