The
Biggest Business Credit Myth- By Trent Lee-Trentlee@corporatecreditconcepts.com
Can you establish good business credit if
you have bad personalcredit? Of
course? However, there are a number of important stipulations that
you should be aware of.
In order to properly build business credit, you must have a proper
business structure set up. This means that there must be a
separate legal entity that you run your business from, one that is
separate from your personal credit file, sole proprietors are
out! It is preferable that you have a corporation or an LLC in place.
Even if you have been in business for years, you may not have years of
business credit history. Usually the business owner will be required to
personal guarantee some of the initial business funding at the banking level. Once you
build and establish your business credit history then you have more options
to drop the personal guarantee.
Many business owners do not realize that there a two types of business
credit, namely trade credit and cash credit. Trade credit is where a
vendor issues your company a credit line. The credit can only be
used at vendor that issued your business the
credit. An example would be an office supply store, they may issue
the business a $5000 credit line, the credit line can
only be used at that office supply store.
Trade credit may be useful for some businesses; however, most businesses
need cold hard cash! This is where business credit really comes to
life. As you build and increase your trade credit you better
your chances for higher lines of cash credit. Lets be honest, the
main reason business owners build business credit is to obtain
working capital. Trade credit is an important part of the business credit building
process, but it is only a stepping-stone to cash credit.
The biggest myth about building business credit is that many business
owners think that they can build good business credit to make up for the
fact that they have bad personal credit. You can absolutely
build good business credit regardless of your
personal credit, but most of the credit you obtain will be trade credit.
If you are looking for cash credit banks will require that you disclose
the social security number of the business owners. This means
that they will be pulling a personal credit report to verify
that you have good personal credit. The banks will want to see a
640 or above in order to obtain business financing.
If you have bad personal credit, it is recommended that you build
business credit while you work on repairing your personal credit.
In order to take full advantage of business credit you should have two
good credit scores??personal
and business. It is
important to realize, if you build you business credit properly, it will
not show up or harm your personal credit file.
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>