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business credit rating, bad credit habits, credit report, credit file, credit periodically, credit rating, credit application |
Building Good Business CreditInternet Epoch | Home Live | Look Faq |Author: Gerri Detweiler Can you establish good business credit if you have bad personal credit? The answer is yes...but with a few caveats. Business credit reports and personal credit reports are generally completely separate databases for legal reasons. However, there are some exceptions in terms of how independent that information may be: -- If you are operating as a sole proprietor or Limited Liability Company, it is difficult to separate your personal and business credit. A corporation is a much better structure to build a completely independent business credit report. Experian sells a credit score that is a combination of the business owner's personal credit history and the businesses' credit history. In the early years of a business, the owner will almost certainly be required to personally guarantee loans. However, as you establish a strong business credit rating for your enterprise, you'll have more leverage to negotiate for a loan without your personal guarantee A warning: some people try to use business credit file to repeat bad credit habits. "I've seen people who ruined their own credit go out and start a business,
enlist the help of people with good personal credit to If, however, you legitimately want to make a go of a business, have a solid plan, and are willing to do what has to be done to get it off the ground, then you should let a bad personal credit rating stop you. Building or rebuilding good credit - whether it's personal credit or business credit - is a process. Be patient as you work on both your personal and business credit. The results will be worth it. For more information, visit www.businesscreditsuccess.com. Author-Bio: Gerri Detweiler is considered one of the country's top credit experts. She has been interviewed for thousands of radio, television and print newstories including USA Today, The Wall Street Journal, The New York Times, Dateline NBC and many others. She has testified before Congress several times and worked on reform of the national credit reporting laws. Article Source: digital-women. The ABCs of Business CreditBy David Gass As an entrepreneur, did you know you have a unique opportunity to build, maintain and acquire credit both individually and as a business owner? That's good news if you're trying to build and grow a company because you won't have to rely solely on your personal credit to do that. As a member of the business credit industry, it's been my experience that fewer then 10 percent of all entrepreneurs know about or truly understand how business credit is established and tracked?nd how it affects their lives and businesses. So let's first take a look at how personal credit differs from business credit. Then we'll discuss some steps you can take to build your business credit. Personal Vs. Business CreditAt the point an individual with a social security number accepts their first job or applies for their first credit card, a credit profile is started with the personal credit reporting agencies. This profile, otherwise known as a credit report, is added to with every credit inquiry, credit application submitted, change of address and job change. The information is typically reported to the credit bureaus by those who are issuing credit. Eventually, the credit report becomes a statement of an individual's ability to pay back a debt. In some cases, the same is true for businesses. When a business issues another business credit, it's referred to as trade credit. Trade, or business, credit is the single largest source of lending in the world. Information about trade credit transactions is gathered by the business credit bureaus to create your business credit report using your business name, address and federal tax identification number (FIN), also known as an employer identification number (EIN), which you get from the IRS. The business credit bureaus use this compiled data to generate a report about your company's business credit transactions. In many cases, those issuing credit to you will rely on your business credit report to determine if they want to grant you credit and how much credit they'll give. The major business credit bureaus that compile and provide copies of the reports are:
Unfortunately, because the information provided to the business credit bureaus
is sent in voluntarily--no business is required to Establishing Business CreditLet's start by talking about your business credit score. Business credit scores range on a scale from 0 to 100 with 75 or more considered an excellent rating. Personal credit scores, on the other hand, range from 300 to 850 with a score of 680 or high considered excellent. It's important to note that there are many factors that affect a credit score; it's based on more than just whether you pay your bills on time. Your score can be affected by the amount of available credit you have on bank lines of credit and credit cards, the length of time you've had a credit profile, the number of inquiries made on your credit profile and more. You can find out more about what factors affect your credit rating by visiting www.myfico.com. The mistake many business owners make is using their personal information to apply for business credit, leases and loans. By doing so, they risk having a lower personal credit score. Why is that? The average consumer credit report gets just one inquiry per year and has 11 credit obligations, typically broken down as 7 credit cards and 4 installment loans. Business owners are not your average consumer, however, because they carry both personal and business credit. This typically doubles the number of inquiries made to their personal credit profile and the number of credit obligations they carry at any given time, all of which negatively impact their personal credit score. And because business inquiries and personal inquiries aren't separated on their personal credit report, the scores, again, is negatively affected. At the same time, by using their personal credit history to get business credit, they're not able to build their business score, which could help them attain critical business credit in the future. More info about the ABCs of business credit How's your business credit rating?by Jeanne d'Arc Umurungi Most businesses require some form of financing at various points in their development. Increasingly, leasing and lending institutions refer to a credit score when evaluating an individual's or a company's risk. It is important for you as a small business owner to understand, build, monitor, protect and control the information in your credit file. What is a credit score? A credit score is a snapshot of your credit picture at a particular point in time. Your credit score will change as information is added, altered, or removed from the credit report. Credit scoring means that in the future, your ability to get a loan will be based on the information in your personal and/or business credit file. It is an indicator of the risk level that you as borrower might represent, and is used to predict future performance. What is a Consumer Credit File? When you begin to borrow money or apply for credit, a credit file is created for you. Lending institutions that deal with you send specific, factual information about all their customers to a credit-reporting agency. Your credit file is regularly kept up to date, and it might include credit ards, lines of credit, along with your payment history, and it can be referred to in the future with your consent. What is a Commercial Credit File? Commercial credit reports provide creditors and risk underwriters with a detailed picture of a business credit history. Commercial reports also record negative occurrence information, such as third party collection claims, legal suits, judgements and returned cheques. Commercial risk scoring is done on a scale from 0-70, 20 being a neutral score. The higher the score, the greater the risk. Who can access your credit file? A company may only obtain your credit file with your consent, after having told you it may be requesting it. A company must have legitimate business reasons for wanting to access your credit file. What you can do:
More info about business credit rating |
be executives in the company, and get major credit cards. They didn't have a real
product or service, and the objective was to just get credit. They would inevitably
default on the corporate credit lines," says Erik Salmon, Director of Business
Credit Services for Innovative Business Services (IBS) and an experienced business
credit coach. If that's your intention in establishing a business 
send it in--the credit bureaus may never receive all or even any information about
your business credit transactions. In fact, you could go for years racking up
business credit without any of it being reported to the credit bureaus.