A commercial lender will want to review both personal and business credit when evaluating a loan application. This is because in many cases, the owner of the business will need to personally guarantee the loan.

Before you begin the process of applying for a commercial loan, you need to review both your personal credit history and that of your business to be certain that all of the information is correct. You can obtain a personal credit report via many banks and credit card companies that you might have a relationship with. They will provide you with your scores from TransUnion, Experian and Equifax which are the three major consumer credit reporting companies. Your business credit report can be acquired from Dun & Bradstreet. You will want to carefully review the information on each report and check it for accuracy. If you discover any errors then you should contact the agency to correct the matter prior to submitting your application to a commercial lender.

If you are disputing any information on your credit report, it is wise to contact the creditor to attempt to correct the issue. That can be much faster than having the credit bureau try to sort out an error. Once the issue is resolved, the credit agency is required to remove any information that has been found to be inaccurate. This is a much better plan than explaining to a commercial lender that the information is incorrect and that you are working with the credit bureau to have the error removed.

Establishing Business Credit

A commercial lender is going to expect to see at least four or five trade credit purchases to consider your business as having a credit history. To establish this creditworthiness you should set up a few accounts and use them prior to applying for a commercial loan. This will provide the lender will enough reference information to determine that your business is reliable and has been granted credit in the past and maintained it successfully. You can obtain a free copy of your business credit report by visiting www.dnb.com. You will also want to verify any information on that report just as you did for your personal credit report.

Good Credit Is Critical

As you might imagine, a lender will only know a limited amount about you and your business. Much of the information that they used to judge your creditworthiness comes from your credit reports. Having a strong history of borrowing and repaying loans is a good way to demonstrate responsibility and dedication to repaying your debt. Having a few slow pay items on your report can be an indication of issues. In most cases you will not be able to offer explanations that will remove the doubt created by these poor reports. Understand that your credit report will weigh more than anything that you can say to the lender to change their mind if you are determined to be a poor risk for a loan. If you have poor or questionable credit then you will want to focus your time on less conventional lenders to borrow for a commercial real estate purchase.

Dennis Dahlberg
Broker/RI/CEO/MLO
Level 4 Funding LLC  Private Hard Money Lender
Arizona Tel:  (623) 582-4444
Texas Tel:      (512) 516-1177
Dennis@level4funding.com NMLS 1057378 | AZMB 0923961 | MLO 1057378
22601 N 19th Ave Suite 112 | Phoenix | AZ | 85027
111 Congress Ave |Austin | Texas | 78701

About the Author:  Dennis has been working in the real estate industry in some capacity for the last 40 years. He purchased his first property when he was just 18 years old. He quickly learned about the amazing investment opportunities provided by trust deed investing and hard money loans. His desire to help others make money in real estate investing led him to specialize in alternative funding for real estate investors who may have trouble getting a traditional bank loan. Dennis is passionate about alternative funding sources and sharing his knowledge with others to help make their dreams come true. Dennis has been married to his wonderful wife for 42 years. They have 2 beautiful daughters 5 amazing grandchildren. Dennis has been an Arizona resident for the past 40 years.

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