---
title: "Dos and Don’ts in Credit: How to Qualify for a Bigger Business Loan"
description: Find out how to qualify for a bigger business loan by keeping a healthy credit score.
---

[FranFund Blogs ](https://www.franfund.com/blog)

# [Dos and Don’ts in Credit: How to Qualify for a Bigger Business Loan](https://www.franfund.com/blog/-dos-and-donts-in-credit-how-to-qualify-for-a-bigger-business-loan)

 Written by [FranFund](https://www.franfund.com/blog/author/franfund) | Mar 4, 2020 10:21:10 PM

You probably know what a credit score is, but do you know how to protect it? By understanding what affects your credit score, you can make better decisions that will, in turn, positively impact your score. Not only is understanding your credit score important when looking for a car loan or mortgage but maintaining a good credit score is essential for any business owner. Most lenders will heavily weigh your score when determining your business’ creditworthiness, but what impacts your score? Let’s look at the five factors that are considered when your credit score is reviewed.

## **Understanding Your Credit Score**

A credit score is essentially a grade for your creditworthiness. It gives lenders an idea of how quick and reliable you are when paying back debts. Along with equity, collateral, and burn rate, credit score is one of the [main qualifiers](https://www.franfund.com/business-loans#pre-approval) for business loans.

While there are various credit scoring models, the [five factors](https://www.experian.com/blogs/ask-experian/credit-education/score-basics/what-affects-your-credit-scores/) that affect your score are almost always the same:

<https://www.franfund.com/hubfs/Pie%20Chart%20-%205%20factors%20affect%20credit%20score.png>

### **1. Payment History**

This accounts for 35% of your credit score; things like late payments on bills, repossessions, bankruptcy, and liens can cause your score to drop.

### **2. T****otal Amount Owed** 

This is your debt to credit ratio and accounts for 30% of your credit score (how much debt creditors have extended to you vs. how much of the credit you’ve used).

### **3.** **Length of Credit History**

This makes up 15% of your credit score; takes into account the average age of the accounts on your report and the age of the oldest account (in this case the older, the better).

### **4. Types of Credit**

Your "types of credit" is mix of accounts you have such as revolving debt (credit cards) and installment debt (loans); this is 10% of your credit score.

### **5.** **New Credit**

Your pursuit of new credit makes up 10% of your credit score; however, it only accounts for hard inquiries. Soft inquiries do not show up on your credit report.

[INSERT WEBINAR CTA]

## How to Make Sure Your Credit Doesn't Take a Hit

To make sure your credit score stays solid, take a look at our list of credit dos & don’ts.

 

 

There are many things you can do to keep your credit score healthy. But, if your credit score is in need of repair, it may just take [time](https://www.debt.com/credit-repair/how-long-does-credit-repair-take/) to improve . The longer it has been since you have paid back a debt, the better your score is going to get. If time is of the essence, consider getting a guarantor or a cosigner on your loan.

### Other Helpful Funding Options

Typically, banks require a minimum score of 680 to qualify for an SBA loan. If you don’t meet this criteria, you should consider other funding options including [401(k) business funding](https://www.franfund.com/401k-business-funding). Our trusted funding consultants can talk with you to determine the best funding solution for you. Connect with us today!

<https://www.franfund.com/funding-consult>

[View full post](https://www.franfund.com/blog/-dos-and-donts-in-credit-how-to-qualify-for-a-bigger-business-loan)

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