Business Credit Article #1

Build Good Business Credit by Not Making It Personaln When you need to borrow money to grow your existing business, wouldn’t you like to walk into a bank and know that you stand the best possible chance of being approved? Of course you would, but do you know how to get your business to that point? The answer is simple; your business needs good business credit. n As a business owner, you have already gone through the long process of building good personal credit. Perhaps you have even used your personal credit to set up your business, but it should stop there! Using your personal credit to fund your business is a losing proposition and puts you at great risk of damaging your personal credit score.n If you use your personal credit to secure money for your business, you are reducing your credit score with every inquiry a bank makes for each loan request. You are also hurting your personal credit score by increasing your debt-to-income ratio. n Your personal credit is attached to your social security number, and any outstanding debts brought by your business will follow you, even if you are no longer in business. It is vital, therefore, to establish a line of credit under your business tax i.d. number instead of your social security number. n Furthermore, your chances of obtaining business financing will increase by over 250% if you have business credit. Building business credit also protects the business owner by separating personal liability from business liability because good business credit may not require a personal guarantee from the owner. n As a business owner, you can save literally thousands of dollars by securing lines of business credit in place using your personal credit because business credit rates are typically lower than personal credit rates. Even shaving off a few percentage points in interest can save a lot of money in the long run. n A business credit profile can be established for common C-Corporations, S-Corporations or a LLC, which are all businesses based on tax i.d. numbers. Sole Proprietor businesses are based on the owner’s social security number and not recommended for credit building. n Like good personal credit, however, building good business credit takes time and requires many different simple steps to be taken. And since there are no laws protecting business owners from business credit bureaus, it is imperative to set up your business credit properly. n First, do not buy your business credit from companies who offer to sell trade references. Not only is it an expensive rip off, you risk having your business being labeled as “High Risk” should a credit bureau find out what you have done. It is extremely difficult to remove “High Risk” status from your business credit profile. n Second, as you begin building business credit make sure you are working and spending with companies that are set up to report your good payment histories to the business credit bureaus. It defeats the purpose of trying to get good trade references if all your good deeds go unnoticed. One of your goals for building business credit is to obtain a paydex score, and your business will need at least 5 trade references in order to obtain one. n These steps, and the many others you will need to take to build good business credit, require patience, diligence and dedication. Don’t risk your personal liability anymore and start down the road that can lead to untold amounts of money lent to your growing business. n Corporate Credit Concepts makes it easy to establish business credit. To obtain your free report on how to build business credit and obtain Unlimited Financing click here: http://www.freecorporatecredittips.com. n