BUILD CORPORATE CREDIT
what to avoid
MAKE YOUR COMPANY ELIGIBLE FOR FUNDING. CHECKLIST:
INSTRUCTIONAL VIDEOS TO BUILD BUSINESS CREDIT
HOW TO OPEN BANK A ACCOUNT FOR YOUR COMPANY.
HOW TO FOREIGN FILE YOUR COMPANY
SET UP YOUR BUSINESS ADDRESS, FAX AND PHONE TO BUILD BUSINESS CREDIT
HOW TO BUILD BUSINESS CREDIT TO APPLY FOR A BANK LOAN
WHERE DO YOU APPLY FOR BUSINESS CREDIT? EXAMPLES?
CREDIT LINE HYBRIDS.
Credit Lind Hybrid Program
hybrid of credit cards
This type of financing is a hybrid of credit cards and credit lines. With credit cards you can get a 0% rate, and with credit cards, you can get cash out. With the credit line hybrid, you have access to both these features simultaneously. In addition to this, you’re also building business credit in the process, which is a huge benefit. You can get five to eight lines; many of these report to business credit reporting agencies. And the more accounts on your business credit report, the more fundability the business will attain.
FICO score of 680+
good personal credit
THE FICO SBSS SCORE.
high FICO SBSS score
THE PROCESS OF BUILDING BUSINESS CREDIT.
good personal credit
Develop a Business Credit Portfolio
Begin building a foundation of fundability by setting up the business properly: name, address, phone/411, EIN, NAICS code, web site, e-mail, business license, and business bank account. Make sure this data is consistent everywhere. Inconsistencies with the business data will significantly undermine your ability to obtain funding. For example, if the business name/address on the credit application doesn’t match that listed with the Secretary of State, the lender will consider the application fraudulent and immediately issue a denial.
2. ESTABLISH BUSINESS CREDIT REPORTS
ESTABLISH BUSINESS CREDIT REPORTS with Equifax, Experian, and Dun & Bradstreet.
3. BEGIN BUILDING BUSINESS CREDIT – TIER 1 ACCOUNTS
Open accounts with “starter vendors” that you are certain report to the business credit reporting agencies mentioned in step 2. (Otherwise, you’re wasting your time with non-reporting accounts that do not build credit.) Consistently pay these accounts early or on time to establish a business credit foundation.
4. MONITOR REPORTS
5. TIER 2 ACCOUNTS
6. TIER 3 ACCOUNTS
7. TIER 4 ACCOUNTS
expound business credit portfolio
AUTHORIZED USERS AND COSIGNERS.
business owner’s credit
With FICO (personal credit), 80% of the score is made up of payment history (35%), utilization (30%), and length of credit (15%), so an authorized user can experience improvements to their own personal credit, which leads to them being able to open additional accounts. Serving as an authorized user on a consumer account will not help an individual build business credit, however. The payments report to the account holder’s personal credit, and any benefits the authorized user receive will be to personal credit.
Here is a caveat regarding tradelines: Businesses will sell tradelines to companies claiming they’ll be able to get accounts rapidly that report to business credit and will build the business credit score quickly. However, this really does not work because creditors will look at how long those tradelines have been in existence and will discover that you bought them from a company.
When you purchase a tradeline, you’re paying to become an authorized user on someone else’s account, known as piggybacking, which is considered a deceptive practice. It doesn’t indicate the creditworthiness of the business. You will reap no benefit from this at all because you don’t even have access to the account, and it is considered fraud.
Some companies selling tradelines use stolen identities, so by buying tradelines you could be piggybacking from someone who is unaware of this, or even a deceased individual. Lenders and credit reporting agencies know all the tricks and will scrutinize new authorized user accounts.
Dun & Bradstreet
A cosigner, or guarantor, is an individual who signs on to a credit account they do not own, thereby essentially agreeing to pay the debt if the owner does not. A business cosigner is typically associated with the business.
A cosigner helps a business owner to get a business credit card or line of credit for which they would not otherwise qualify, because the lender is assured that the cosigner will pay if the business owner doesn’t. Cosigners simultaneously allow a business owner to get funding and build personal credit. However, this will not help build business credit unless that account reports to business credit reporting agencies.
utilizing a cosigner
A valid alternative is to use credit partners, business partners possessing strong credit which allow a business to get credit approvals based upon their creditworthiness. Often, these report to business credit reporting agencies, and the business receives the benefit.
There are benefits to utilizing authorized users and cosigners to assist with obtaining business or personal credit. Which you choose ultimately depends on the goals you endeavor to achieve.