If you’re planning to start your own food truck business, you want to check and fix your credit report before applying for a small business loan. Outside of your business plan, your credit report is the key document that lenders use to determine whether or not to issue you a loan. You want to make sure that all the information appearing on your report is correct. Here is how you can get a copy of your report and check its accuracy before going to the bank.
You Need A Credit Report Before You Can Fix Your Credit
Order a credit report from 1 of the 3 main providers
Your credit score is affected every time a prospective lender pulls a copy of your credit report. However, if you order a report directly from Experian, TransUnion or Equifax, your credit will not be adversely affected. Every person is entitled to a free credit report from one of these three agencies every 12 months.
In order to request a copy of your report, you must provide personal information and proof of identity, including your driver’s license and a current utility bill.
Check your credit report for inaccuracies
Your credit report contains a wealth of personal information including your name, social security number, current and previous addresses. It also may include current and past employers. You report also includes all credit accounts that you have opened and the amount due on each account. Additionally, the report details any delinquencies on any of these accounts and any inquiries made by potential creditors.
Once you’ve received your report, check its accuracy. You can dispute any errors by submitting a letter to the credit reporting agency. After researching your claim, they will correct any false information. They will then send an updated report to you and potential creditors, and those who have requested your report in the past six months. If the agency denies your dispute, you can still submit a written statement to them explaining the error. This statement will be shown to lenders who pull your report.
Use the information to fix your credit
If your credit report is loaded with late payments, and you have a number of revolving accounts with high balances, you’ll have a difficult time getting a loan for the purchase of a food truck. Use the information on your report to help make you a more desirable lending candidate. If your balances are too high, take a few months to pay the majority of them off.
If you have too many late payments, consider finding a co-signer with little or no debt and a solid credit history. Since late payments and delinquencies stay on your record for seven years, you may not be able to fix your credit in a few months or even a few years. However, being well-informed can help you avoid surprises and prepare a contingency plan if need be.
The Bottom Line
Applying for a food truck business loan is a huge financial decision. Don’t go into it unprepared. Be sure to check your credit report and make a plan of attack to fix your credit, based on what you discover.