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Are you looking to boost your chances of securing a small business loan? The FICO SBSS score is a crucial factor when applying for SBA loans, and understanding how to improve it can significantly increase your chances of approval. In this blog, we’ll break down actionable steps to enhance your score and explore resources designed to support small business owners in achieving their financial goals.
What Is the FICO SBSS Score?
The FICO SBSS (Small Business Scoring Service) score evaluates your business’s creditworthiness and is a key metric used by lenders, particularly for SBA loans like the 7(a) or Express programs.
- Score Range: Typically ranges from 0 to 300, though bank-specific thresholds may vary (e.g., 135–160).
- Usage: A higher score expedites loan processing, while a lower score may lead to application delays or denials.
Key Factors That Affect Your FICO SBSS Score
Lenders assess multiple elements, from personal credit history to business operations. Here’s what to focus on:
1. Business Entity Setup
- Start Fresh: Use a new entity unless an existing one is already operational for the intended purpose.
- Accurate Documentation: Ensure all business registration and application details align with your financial records.
2. Personal Credit Report Accuracy
- Check Regularly: Obtain a free copy of your credit report.
- Correct Errors: Fix inconsistencies in your name, address, or employment history.
- Maintain Low Utilization: Keep credit card usage below 30%, ideally under 10%, to boost your credit score.
3. Credit Utilization
- Leverage Business Credit Cards: Charge expenses to business cards to keep personal credit utilization low.
- Avoid Low-Tier Cards: Focus on major bank credit cards like Wells Fargo instead of retail store cards.
Building Strong Credit History
To build a robust credit profile that supports your FICO SBSS score, follow these tips:
1. Manage High Credit Limits
Demonstrate financial stability by handling significant credit responsibly:
- Build high credit limits over time.
- Show successful repayment of loans or lines of credit, such as a $50,000 loan, to reflect reliability.
2. Use Credit Strategically
- Avoid opening unnecessary accounts.
- Maintain a healthy mix of credit types, including installment loans (e.g., auto loans) and credit cards.
Additional Resources for Entrepreneurs
The journey to improving your FICO SBSS score doesn’t end with individual efforts. Joining supportive communities can provide guidance and inspiration.
Business Ownership Academy
- What It Offers:
- Educational resources for entrepreneurs.
- Networking opportunities with industry experts, franchise operators, and bankers.
- Case studies on successful business acquisitions.
- Why Join?: Regular events like lunch-and-learn sessions and workshops aim to help small business owners take actionable steps toward their goals.
Visit BusinessOwnershipAcademy.com to learn more and become a founding member of this vibrant entrepreneurial community.
Take Action Today
Improving your FICO SBSS score is not an overnight task but a series of small, consistent steps:
- Review and correct your credit report.
- Build high-limit, low-utilization credit accounts.
- Focus on creating a strong mix of personal and business credit.
By enhancing your financial standing, you’ll not only increase your chances of securing SBA loans but also build a solid foundation for your business’s success.
Ready to take the next step? Join the Business Ownership Academy today and gain access to expert advice, practical tools, and a thriving community of like-minded entrepreneurs.