How to Get A Free Loan for Your Business
Despite the fact that banks are highly vocal about
their woes of people going bankrupt and not paying them back, banks are more
aggressive than ever regarding giving people personal loans and lines of
credit. The thing that you want to do is to begin to build these lines of
credit long before you have a business opportunity in your lap.
The fact is that unless you already have excellent
credit and accounts open, it’s hard to quickly get some large loans. The best kind
of loans that you will want is personal unsecured loans. Your credit cards are
personal unsecured loans. You can march down to your bank and get a cash
advance against them.
You can also have other open lines of unsecured
credit. They can be with your local banks or lending institutions anywhere. The
credit game has changed over the last recent years. Previously, there was more
of a chance for your personal circumstances to outweigh other negative items
that are on your report.
However, these days the big thing that all lenders
look at is your credit score otherwise known as your beacon score. If you want
to obtain loans then you need to understand a little bit about how this scoring
system works. The truth of the matter is that it’s questionable at least in my
mind if anyone really fully knows how they work. But here is a generalized
explanation if you weren’t aware of it:
There are values assigned for all the different
variables such as your:
Income
Repayment
History
Amount of
Your Total Credit Lines
Amount of Debt Vs. Total Credit Lines
Type of
Residence
Years at
Residence
And others
A computer model then calculates the all of these
variables by assigning weights and a credit score is created. There are three
major credit reporting bureaus. To find them, all you need to do is go online
and key in on any search engine, “credit reports”.
The first step toward building your credit is to
access your report from all three bureaus. Today, you can conveniently do it
all online with a “three-for-one” report order.
You Can Improve Your Credit Score:
Let’s get rid of some of the myths of credit. Anyone
out there who advertises that they can magically get rid of negative items is
lying. However, there are a number of things that can be done to try and get
items removed.
You can do anything a credit consulting service
offers to do. That being said, if you have the money to spend and not the time,
there’s nothing inherently wrong with hiring someone else to do it as it’s
basically clerical work.
But, first let’s decide how much work your credit
score needs:
If your
score is 700+ then you are in very good shape. You are considered an excellent
credit risk and will be offered the best deals…low rates, no fees, no down
payments required, etc. This is where you’d like your credit to be.
If your
credit score is between 650 and 700, then your credit isn’t too
bad...especially if it’s closer to the 700. You’ll be able to get credit cards,
other unsecured lines of credit. You’ll be given decent rates and terms, but
not the best. If your score is here you should make some effort to improve it
although it won’t paralyze your ability to obtain loans to fund your business
deals.
If your
score is under 650 your credit score is lousy. If you can get credit at all it
will be with high interest rates, large down payments, big annual fees, etc.
Really, no matter where your credit score is unless
you currently have the ability to go out tomorrow and borrow $250,000 on just
your signature without anyone needing to approve or authorize anything, then
you could use to improve your credit.
Let’s face it. If you can go out and just get
$250,000 you’ve got a lot of freedom to make any business deal that you see
fit.
If you have some credit, here’s the fastest way to
get those credit limits increased and get more of them.
Start borrowing against the limits almost to the
maximum. But...and this is a huge point: DON’T SPEND THE MONEY! Take the money
you borrowed and put it in the bank where it can collect a little interest to
offset any interest charges you might accrue.
Now, if you do have good credit already, then you
won’t get hit with much interest charges because more favorable credit card
terms don’t charge interest on the balance if the total balance is paid off in
full at the end of the month. Either way, that’s what you do. Worst comes to
worst, you have to invest a little money on interest for your future.
Now, start doing the same thing on your different
lines of credit. Each month you borrow large sums of money and pay them back on
time and in full. Before you know it, you’ll be getting credit line increases
offered to you and other lenders will be pounding on your door. Your credit
score will go up.
If You Have Little to No Credit
Don’t fret. Even if you don’t have any credit, you
can get in on this game too. What you will do is start your loans with what’s
called secured loans. There are plenty of credit card issuers (banks) that
offer them and you can also get personal loans at your local banks with secured
loans. Think about it from the point of view of the bank.
Why in the world wouldn’t they want to give you a
loan if the loan is fully collateralized with cash sitting in an account in
their bank? They’re happy to do it. But, it isn’t reported on your credit
report as a secured loan…at least not yet, although I somewhat expect that to
change when enough people catch on to this plan.
There is no reason you can’t do this. Let’s say that
you are really hurting for money and don’t have even $2500 to throw into a
collateral account where you won’t be able to touch it. Then, get someone you
know to give you the loan. You can guarantee to pay them back immediately.
Here’s how it works:
1. Mr. X gives you a loan for $2500. 2. You put it
into the bank as security for the loan. 3. The bank gives you a $2500 loan. 4.
You pay back the loan to Mr. X. 5. Now, you pay off the loan to the bank. 6.
When you pay off the loan, you now have credit and a forced savings of $2500.
As your credit increases, you’ll be able to start
operating like the people who have some credit…just taking out loans and paying
them back. Within as little time as six months to a year you can build up
substantial lines of credit. And once you’ve done that, if that amazing
business deal comes along and you don’t have the cash or other assets to
convert to cash and you are sure you want to take the risk, then you’ll have
the ability to do it.
Building huge unsecured credit lines is just one of
the ways “street smart” business people
take care of business to increase their wealth and live the good life. For more information on “Street Smart
Business,” follow this link: http://www.smallbizriches.com/streetsmartbusinessprogram/
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