PayLeap, a trusted ecommerce gateway, has customers hailing from both new, small businesses and established companies. But, today we turn our attention to those new businesses that often rely on loans to get on their feet. Because many factors of your loan depend on a bank’s or creditor’s assessment of your credit report and credit scores, PayLeap wants to remind you of a few things you should know about this process:
- Lenders look to credit histories. Before lending money, banks and other creditors look to a consumer’s credit history – basically a record of whether or not you’ve paid your bills — to make sure the borrower is likely to repay them. That credit history, contained in a consumer’s credit report, determines how much credit is made available to you and under what terms, such as the interest rate.
- Consumers should care about credit. Therefore, it’s not only lenders that should care about past use of credit. “Credit reports matter to consumers because lending decisions are based on them,” says Susan Thomas, spokeswoman for credit bureau Experian. ”When you’re applying for credit — whether it’s a credit card, a car loan, a personal loan or a mortgage – lenders want to know your credit risk level,” says Craig Watts, spokesman for Fair Isaac, creator of the popular FICO credit score. ”In other words, ‘If I give this person a loan or credit card, how likely is it that I will get paid back on time?’”
- Credit bureaus track borrowing behavior. The three major credit bureaus in the U.S. are Experian, Equifax and TransUnion. These companies keep records of how you have previously behaved when loaned money, such as whether you paid it back on time, who you still owe money to and how much you may still owe. Where does that information come from? “We acquire data from public records and companies who have a relationship with the consumer and with the credit reporting agency (i.e., existing creditors, companies with whom the consumer has applied for credit and collection companies),” says Experian’s Thomas via e-mail.
For a complete list of things you must know about credit reports and credit scores, visit CreditCards.com.
Once a new business has secured any necessary loans for their start-up, the most important e-commerce decision that your business will make is your choice of payment gateway. PayLeap encourages you to contact us, to be sure that you are dealing with the most trusted e-commerce gateway available.
