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Published By Credit Suite at October 30th, 2015
Most business owners use their personal credit and a personal guarantee for most of their business debts. Want to find out how to build business credit with no personal guarantee?
This causes a big problem as the business owner then becomes liable for the business debts.
And if the business has financial problems, the creditors then start pursuing the business owner’s personal assets like their bank accounts and home.
You can prevent this easily. Business owners can build credit in their business name that requires no personal guarantee, and no personal liability.
This keeps business debts separate from the personal credit, and keeps the business owner safe as there is no personal liability.
Many hear that this is available and are very surprised. It seems they almost think it sounds too good to be true.
Business Credit is credit that is in the business name. This credit uses the business credit profile and score to qualify, not the personal credit.
Most consumers are familiar with regular consumer credit. You can go into a store like Wal-Mart and apply for credit.
When you apply they pull a personal credit profile. And then they approve you on the basis of the strength of that credit profile and score.
Business credit has to be built. You most likely don’t recall building personal credit, and maybe you didn’t need to do so at all. That’s because often college students are targeted with unsolicited personal credit card offers. Or you may have applied for a gas card and gotten a small approval to get started. Or perhaps you applied via your bank once you’d had an account for a while.
Since most personal credit reports to the personal credit reporting agencies (such as TransUnion), you built personal credit. And it felt so seamless that you didn’t even know you were doing it.
Fewer than 10% of all business credit providers report to the commercial credit reporting agencies (like Dun & Bradstreet). That is, unless a business cardholder defaults on their payment. They won’t give you any consideration for good behavior. But they’re more than happy to ding you for bad behavior. Hardly seems fair, does it?
Hence you need to know which providers will report positive payment experiences. This keeps you from wasting your time. Plus, requirements often change. At Credit Suite, we have found that we really need to keep on top of the nuances of credit card requirements. That way, we can advise our clients on the best course of action to take.
Starter vendors give you credit when a lot of other providers just plain won’t. E. g. if your business is a startup, or you’ve got bad personal credit – or both!
For a bunch of vendors we really like which we know report, check out our blog on 5 such vendors. We keep that post up to date so you can be assured it’s got the latest and greatest information.
Apply and get approval for credit from at least three of those vendors. Follow the instructions to get a purchase approved. Wait until at least three payment experiences are on your business credit reports (generally in about 30-90 days or so).
And you’ll be well on your way to a good business credit score – and you’ll be a lot more likely to get an approval once you apply for retail and fleet credit, and bank credit cards.
You can get retail credit at all sorts of places. Fleet credit comes mainly in the form of gas cards, to buy fuel or maintain and service vehicles. Plus there are bank credit cards issued by banks that have more universal acceptance. These are common household names like MasterCard and Visa.
And with business credit, the business credit profile and score are the basis for qualification, not the personal credit.
This means there eventually will be no personal guarantee necessary.
The secret to success with business credit is you must first start building credit with vendors who report to the appropriate business credit reporting agencies.
Once this is done you then will have an excellent business score and profile that can be used to start getting credit in the business name.
All you need is a corporation to qualify. And approval limits are much higher than normal consumer credit.
And yes, even startup ventures can build business credit.