Business Credit Builder Programs Can Help You and Your Business
Business credit builder programs can help you today.
How Business Credit Builder Programs Work
Let’s look into our Credit Line Hybrid as a way to establish business credit. These will report to business CRAs, not personal CRAs. You do not need proof of cash flow or collateral. There is no time in business requirement. Only pay on what you owe, not like a loan.
You can frequently get a 0% introductory rate (usually 6 to 18 months). This is perfect for startup businesses and high-risk industries. It is how business credit builder programs operate.
The General Idea
A lender works on your behalf to acquire credit cards for you. The firm is neither a loan provider nor a credit card issuer. Instead they function as experts in getting credit cards. And they work to apply to get you the most credit they can get.
Nearly always, their tactics to get you credit result in far more than you could get on your own. This is because they go for several cards for you.
Get Credit Cards
They work to get you two sorts of cards. The first is personal cards, which report to consumer credit reporting agencies. And the second is business credit cards, which do not report to consumer CRAs.
Details
Get credit with no security, assets, or collateral. Lender has no collateral to collect in case of default. Since there is no collateral, and they don’t look or care about your cash flow, all that matters is your personal credit.
With a 650 you will get just personal cards. But with a 700 credit score, you can get both business and personal cards.
Advantages
Having several cards fosters competition; get your limits raised normally within six months or less from first approval. You can get approvals to $150,000 per entity, such as a corporation. Most lenders do not offer or advertise this.
You will get cash, and build small business credit, too. In 3 to 4 months, use your newly built small business credit to get even more money.
Qualifications
Here’s how to get approval for unsecured business credit. You need top quality credit with no derogatory reporting. This means: no bankruptcies, ever, on the report, but you may get an approval with bankruptcy, if not on the report.
Balance/Limit Ratios
They look at your balance/ limit ratios on existing revolving accounts. The lower the ratio, the higher the amount of the approval. A 30% ratio is a requirement. This looks at overall percentage, and individual percentage on each account.
Credit inquiries are a substantial factor tying into approval. More than six inquires in six months will be too much. Lenders do not wish to see the person is applying for new credit, especially no other revolving accounts.
Guarantors Welcome
Use a guarantor or a credit partner to raise the numbers; frequently these people want a piece of the business in exchange for their assistance. Creditors want to know you’ll pay them back. Most sources will charge 9 to 12% success-based fees. Only pay the fee off what you secure.
Fees
Pay an average of 10% on the amount you borrow. Lenders on all loan programs charge fees; you easily pay 5% or higher even on an SBA loan. But this program, like most others including the SBA, will “roll-in” your fee. So you do not pay up front.
Once you get your credit cards, the fee is invoiced; this is one invoice per card.
Complement What Business Credit Builder Programs Are Doing – And Build Business Credit
Business credit is credit in a small business’s name. It doesn’t attach to an owner’s consumer credit, not even if the owner is a sole proprietor and the only employee of the small business.
Because of this, a business owner’s business and individual credit scores can be very different.
The Process
Building small business credit is a process, and it does not occur without effort. A small business will need to actively work to establish company credit.
However, it can be done readily and quickly, and it is much faster than building personal credit scores.
Merchants are a big aspect of this process.
Undertaking the steps out of sequence will cause repetitive denials. Nobody can start at the top with company credit.
Company Fundability™
A company needs to be Fundable to lending institutions and merchants.
As a result, a small business will need a professional-looking web site and email address. And it needs to have site hosting from a company such as GoDaddy.
Also, company telephone numbers ought to have a listing on ListYourself.net.
In addition, the company phone number should be toll-free (800 exchange or the like).
A business will also need a bank account devoted solely to it, and it has to have every one of the licenses essential for running.
Licenses
These licenses all must be in the correct, appropriate name of the small business. And they must have the same small business address and phone numbers.
So bear in mind, that this means not just state licenses, but potentially also city licenses.
Working with the Internal Revenue Service
Visit the Internal Revenue Service website and get an EIN for the small business. They’re free. Choose a business entity like corporation, LLC, etc.
A small business can start off as a sole proprietor. But they should switch to a form of corporation or an LLC.
This is in order to minimize risk. And it will take full advantage of tax benefits.
A business entity will matter when it pertains to taxes and liability in case of litigation. A sole proprietorship means the entrepreneur is it when it comes to liability and tax obligations. Nobody else is responsible.
Sole Proprietors Take Note
If you run a company as a sole proprietor, then at the very least be sure to file for a DBA. This is ‘doing business as’ status.
If you do not, then your personal name is the same as the small business name. Because of this, you can find yourself being personally accountable for all company debts.
But don’t look at any DBA filing as being more than a steppingstone to incorporating.
Instigating the Business Credit Reporting Process
Begin at the D&B website and get a free D-U-N-S number. A D-U-N-S number is how D&B gets a small business into their system, to generate a PAYDEX score. If there is no D-U-N-S number, then there is no record and no PAYDEX score.
Once in D&B’s system, search Equifax and Experian’s web sites for the small business. You can do this at www.creditsuite.com/reports. If there is a record with them, check it for accuracy and completeness. If there are no records with them, go to the next step in the process.
In this manner, Experian and Equifax will have something to report on.
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Vendor Credit
First you must establish trade lines that report. This is also referred to as vendor credit. Then you’ll have an established credit profile, and you’ll get a business credit score.
And with an established business credit profile and score you can begin to get more credit.
These types of accounts often tend to be for the things bought all the time, like shipping boxes, outdoor work wear, ink and toner, and office furniture.
But first off, what is trade credit? These trade lines are credit issuers who will give you preliminary credit when you have none now. Terms are often Net 30, versus revolving.
So, if you get an approval for $1,000 in vendor credit and use all of it, you must pay that money back in a set term, such as within 30 days on a Net 30 account.
Details
Net 30 accounts need to be paid in full within 30 days. 60 accounts have to be paid in full within 60 days. In comparison with revolving accounts, you have a set time when you have to pay back what you borrowed or the credit you made use of.
To kick off your business credit profile the right way, you ought to get approval for vendor accounts that report to the business credit reporting bureaus. As soon as that’s done, you can then make use of the credit.
Then pay back what you used, and the account is on report to Dun & Bradstreet, Experian, or Equifax.
Vendor Credit – It Helps
Not every vendor can help in the same way true starter credit can. These are vendors that will grant an approval with negligible effort. You also want them to be reporting to one or more of the big three CRAs: Dun & Bradstreet, Equifax, and Experian.
You want 3 of these to move onto the next step.
Monitor Your Business Credit
Know what is happening with your credit. Make certain it is being reported and attend to any inaccuracies as soon as possible. Get in the habit of taking a look at credit reports. Dig into the specifics, not just the scores.
We can help you monitor business credit at Equifax, Experian, and D&B for 90% less.
Update Your Information
Update the information if there are mistakes or the info is incomplete.
Fix Your Business Credit
So, what’s all this monitoring for? It’s to contest any inaccuracies in your records. Errors in your credit report(s) can be fixed.
Disputes
Disputing credit report inaccuracies generally means you specifically itemize any charges you challenge.
A Word about Building Business Credit and Business Credit Builder Programs
Always use credit smartly! Don’t borrow beyond what you can pay off. Track balances and deadlines for payments. Paying promptly and completely will do more to raise business credit scores than virtually anything else.
Building small business credit pays off. Great business credit scores help a company get loans. Your lender knows the small business can pay its debts. They understand the small business is authentic.
The small business’s EIN connects to high scores and lenders won’t feel the need to demand a personal guarantee.
Business credit is an asset which can help your company in years to come. Learn more here and get started toward building company credit.
A Word to the Wise About Business Credit Builder Programs
Responsible credit management is a must. Always use credit responsibly! Don’t borrow more than you can pay back. Keep track of balances and deadlines for payments. Paying on time and in full does more to raise scores than nearly anything else.
Once you know what influences your business credit score, you are that much closer to creating enhanced corporate credit. And you can do this with business credit building programs.
