Worried about your bad credit score? Read on…

You got great plans backed by great projected numbers, but your application for new business loan or start up loan to open a small business gets rejected. Not once but again and again despite all the efforts you put in refurbishing your application.

You must be wondering why! Answer is your not so good credit score. Some bad performance in repaying the past credit has come back to haunt you. Let’s see how.

How Bad Credit Happens

Financial misfortunes occur due to a number of causes. A business venture didn't go as planned, a job was lost, divorce, unforeseen expenses or needs, mishaps, health issues, etc., I'm sure you know how the story goes. When things like this happen the bank account gets stretched. First the savings get used up, then the lines of credit, credit cards, and department store accounts take on a greater load. What follows is the juggling of debt, delayed payments, collections, settlement makings, re-possessions, foreclosures and perhaps bankruptcy. Most of this will have a negative impact on one's credit score, known in both Canada and the US as a "beacon score".

Once the beacon score is weak (or low, since it is a numbering system score), it becomes difficult to get credit. It becomes next to impossible to get New Business Loans or Small Business Funding needs. Forget loans, even credit cards which are necessary for booking hotels or travel reservations, for car rental, or for purchasing anything online (you do shop on e-bay, don't you?) becomes hard to come by.

What to do

If you have bad credit, it generally cannot be avoided on your credit report. However, you can help to correct credit errors or misunderstandings by writing a letter to the creditor or by writing letters to be included within your credit reports. Sometimes, a letter explaining a sudden loss of a job, a lay off, or a long-term illness will change the view of the lender in reviewing your credit report.

Additionally, you should provide any documentation proving your reason for failing to pay on your debts. By law, credit reporting agencies are required to include letters of explanation along with any documentation proving such explanation with the credit report. As a general rule, a bad credit report usually stays upon your record for a period of 7 years. If you need further information about changing a bad credit report, please seek the advice of an attorney.