Good Credit: A Fortune Cookie to decide your Fate on Singapore Company Registration

It is an undisputed fact that, for entrepreneurs, enough funding is essential for incorporating and running a business. Unless you are rich enough to finance your business independently, you will need to borrow capital either from a bank or some other financial entity. The first inquiry any lender or creditor will make in the course of the processing your business loan is your credit score.

The credit score is a prime factor to a lender when deciding whether to approve the business loan to the applicant. It reflects how well a person can handle and manage finances. A good credit score ensures easy approval of the business loan, which is indispensable for the small businessman. Small investors intending to open a company in Singapore should maintain good credit scores for obtaining finance with ease.

Here are few tips on how to build and maintain good credit scores

• Pay your bills on or before time: It is crucial to understand the value of paying bills on or before the deadline as this factor contributes to the building and maintaining a solid credit score of a person or business. Since bill payment history accounts for one-third of your credit score, you must deal it with care. When you pay on time, it shows the lender that you have got enough cash flow to cover your expenses and the lender reports to the credit bureaus which eventually boost your credit score. You can sign up for the automatic payments system to avoid delay. Make sure to pay at least the minimum amount due in case you are unable to manage the total outstanding amount on a monthly basis.
• Try to reduce credit utilization: You will take a hit if you exceed the credit limit, it indicates the creditor that you may be having a financial crisis and thus, you are a riskier borrower. The credit utilization is one of the prime determining factors of your credit rating as it impacts 30% of your overall score. Thus, it is a good practice not letting your credit debt exceed the credit limit. In case, if you failed to maintain the ratio, you are advised to pay off the excess amount and take some time to raise the credit score and then approach to any lender for borrowing finance.
• Keep track of your Credit report: It is essential to keep track of your credit report periodically to ensure that the report is free of erroneous information. You can monitor the both, your personal and business credit reports for false claims, which can have a tremendous impact on your ability to obtain a loan. If you are having trouble getting a business loan for incorporating a company in Singapore, you can take help of corporate firms like SBS Consulting for advice on finance & accounting and incorporation related issues.
• Never use personal credit for business: Building good credit score can be tricky and time-consuming for small businesses as the information forwarded to the credit bureaus is sent voluntarily. Thus, you are advised to use separate accounts for personal and business so as to establish your business credit in an organized way.
  It is noteworthy that business accounts should be established under the company’s name and tax identification number. Or else, your activity on your business accounts such as timely payment and minimum credit utilization, would not help build a healthy business credit score.

A solid or healthy credit score always appeals a lender or creditor to offer business loan to the small businessman. Do not let the poor credit score come in your way to incorporate a company in Singapore as it will take no time to spoil your dream. To avoid such a situation, follow the above-mentioned tips, build a positive credit score and be a good borrower after starting a business in Singapore.