Typically, a good credit score is needed to be approved for an unsecured business financing loan. That’s because the loan is considered riskier for the lender because the loan is not secured against the borrower’s collateral or assets.
For a credit score range of 300-850, a score of 700 or more is usually perceived as a good score while a score of 800 or more is exceptional. Credit scores help lenders assess whether the borrower is likely to pay back the money owed. A higher score indicates to the lender that the borrower will likely pay back the debt.
A credit scores is important because it is what a bank or other lender uses to decide whether or not to offer you credit, a loan or financing, etc. and what the terms will be.
FICO scores are a very common credit score measurement used by many lenders. The credit score range is from 300 to 850.
|FICO Credit||Rating||What it means|
|300-579||Very Poor||Credit applicants may be required to pay a fee or deposit, and applicants with this rating may not be approved for credit at all.|
|580-669||Fair||Applicants with scores in this range are considered to be subprime borrowers.|
|670-739||Good||Only 8% of applicants in this score range are likely to become seriously delinquent in the future.|
|740-799||Very Good||Applicants with scores here are likely to receive better than average rates from lenders.|
|800-850||Exceptional||Applicants with scores in this range are at the top of the list for the best rates from lenders.|
Having bad credit does not mean that you won’t be eligible for financing. Rather, you may need to look around until you find the right type. Businesses with bad credit history or a poor credit score that are not approved for unsecured business financing may find that a merchant cash advance from a company such as Yellowstone Capital LLC may be a better fit for their needs.