American Finasco > Blog > Creditworthiness

It’s not uncommon for any small business to experience financial hardships. When this happens, many business owners consider different methods of financing. There are several options available and it can be hard to find the best option for your business. Not all of these options are easily attainable. Here is a look at creditworthiness, one of the most important factors used to determine financing availability for your business.


What Is Creditworthiness? 

Creditworthiness is how a lender determines how likely it is that you will fail to repay your debt obligations, or how worthy you are to receive new credit. This is what creditors review before they approve any new credit to your business.

Your creditworthiness relays a message. It shows a creditor just how fitting you are for that loan or business credit card application. The decision the company makes is based on your overall credit history, personal and business. This allows the lender to look at several different factors such as: credit report, credit score, and payment history.

Credit Report

A credit report outlines how much debt you and your business currently hold. It reflects any high balances, credit limits, and current balances. It will also show whether there have been any missed payments, any defaults, bankruptcies, and other collection items.

Credit Score

Your creditworthiness is also measured by your credit score, which is a number between 300 and 850 supplied to lenders on your credit report. A high credit score means your creditworthiness is high. Equally, a low credit score reduces creditworthiness.

Payment History

Payment history is also noted when determining creditworthiness. It counts for 35% of a credit score. Lenders don’t generally extend credit to a business with a history of late or missed payments. If you have made all payments on time, your payment history should be in good-standing.

Why is it important?

Your creditworthiness is important because it will determine whether you get that source of financing you may desperately need. But that’s not all. The more creditworthy you are, the better it is for you in the long run because it normally means better interest rates, fewer fees, and better terms and conditions on a credit card or loan, which translates to more money in your pocket. It also affects employment eligibility, insurance premiums, business funding, and professional certifications or licenses.

If your business is financially struggling, consider American Finasco.  We have several options to reduce your commercial debt and help repair your credit problems. This will allow you, the business owner, to stay focused on your business. We provide strategies to take the pressure off business owners having a hard time managing their debt. The first step towards debt relief is a phone call to American Finasco. We provide our clients effective solutions for business debt relief. Contact us today to get your business on the right track! Visit Contact Us and complete our Online Form for a free consultation or call (800) 299-2909. We look forward to speaking with you.