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How to Establish Business Credit Despite Your Personal Credit
By
Karen L. Hardy, MSBA
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Business credit is more of a
science than an art. The first rule for this science is
that it is not the same as personal credit.
Many would-be and aspiring business owners are not aware
that establishing credit for a business is just as
important as establishing personal credit. They also do
not realize that a business can have a credit score
separate from their personal credit score.
There is a world out there designed specifically for the
business entity with a whole set of different rules.
Many entrepreneurs start out accumulating excessive
personal debt to finance a business. Within a few months
or even years, they find that the business is a monster
and needs more food, also known as financing.
With credit cards maxxed to the limit, business owners
find themselves in a crunch and searching for ways to
raise capital. This is difficult to do when the time is
not taken to establish business credit first. Business
credit is a crucial first step and foundation to build
upon.
First, a business is not real. It really doesn't exist
until legal steps and processes are completed to say that
it does exist. PEOPLE create businesses that have not been
tested, employed or ever earned a paycheck. So, when you
start a business and begin looking for financing, the bank
WILL ALWAYS look at your credit because they can touch you
(and your job, and your car, and your house...). You have
a history. Your business does not.
They will pull YOUR credit report. Not the business. And
do you know why? Because you have not established a
business credit profile separate from your personal credit
profile.
Can this be done? How does a business establish a credit
profile separate from your personal credit profile?
There is a credit system that will help you:
1. Lease vehicles like Lexus or Lamborghini, with added
tax benefits.
2. Get a business line of credit or Small Business Loan or
Business Credit Card for expanded Advertising, Inventory
and other expansions your competitors can't get.
3. Invest in large projects like Commercial Property or
Land or Construction that your personal credit isn't
enough to guarantee.
4. Protect your personal assets from that of the business
by not having to sign, no personal guarantee.
5. Start over with a new credit file if you need to,
instead of just being stuck with your personal credit
report
Start new businesses you always wanted to start with
Business Loans.
6. Separate your personal credit from your new shiny
business credit profile
7. Get a new credit report for every business you start.
Establish business credit that's good even if you have
poor personal credit (it's true!)
Anyone who wants to establish a REAL BUSINESS, with
CREDIBILITY that's bankable ought to establish business
credit.
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