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Protecting Your Credit Score

Friday, January 14, 2005

A Simple Benefit of Equipment Leasing
We get asked all the time about the advantages of leasing over traditional forms of financing.

There are simply many more cases where the advantages of leasing far outweigh traditional financing vehicles such as credit cards, personal lines of credit, etc.

Let's look at how traditional lines of credit affect one's credit score. Every time you take out a traditional loan, you are impacting your credit score. Why? Bankers carefully study an individual's debt to income ratio to determine how much to loan out. Bankers will gladly extend credit and financing... up to a very exact point. This point is a specific mathematical ratio, where they suddenly get nervous, typically as your debt ratios approach certain figures.

As your debt increases, it is very common for your personal credit score to take a hit, particulary if your balances are high relative to the amount of credit you have available.

For most small businesses, they end up maxing out far before they have aquired the financing they need.

Is there a solution? Welcome to the world of "leasing". Leasing quite simply is an asset based loan. The money being lended is being secured against what is being purchased. And guess what? This doesn't go on your credit score. And since the loan is tied to specific equipment, you can traditionally get more money/equipment than you would otherwise be able to using a non-secured line of credit.

It's a simple win-win situation. And yes this post has oversimplified the subject of equipment leasing. Our hope is that this new way to finance, piques your interest and motivates you to discover more about the benefits of leasing and how you can use it to grow your business.

Best of luck!

Learn more by visiting GCR Capital today.

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