Repairing Your Personal Credit to Establish Your Business Credit History
Establishing a separate credit history for your business can be compared to a student, trying to build a personal credit. At first, a student may bank on a co-signer’s credit history to get approved for a loan or a credit card. As a new business owner, you will need to bank on your personal credit history to get approved for a business loan or a business credit card. Needless to say, having a good personal credit will work to your advantage. This article talks about how you can improve your personal credit and use it to build your business credit.
Your Personal Credit and Your Business
A lot of new business owners apply for loans to finance their projects. Nevertheless, without business credit, lending companies will check on the entrepreneur’s personal credit history before granting an approval for the loan application.
If you have a high FICO score, getting that business loan should not be difficult especially if you have submitted all the necessary requirements or documentations. But what if you have a problem with your personal credit score? How can you get the business loan you need despite an unimpressive FICO score?
One option is to apply for a bad credit business loan. Lending companies who offer bad credit business loans are not strict as standard business loan lenders. Understandably, these loans will be more expensive than regular loans that require good credit.
You may also work on improving your personal credit score first before submitting that business loan application. There are many ways to raise your FICO score such as checking your credit report for accuracy, paying off your past due debts, submitting payments on time, and lowering your credit-debt ratio. You may need at least six months to raise your FICO score depending on the status of your credit.
Establishing Your Business Credit
After getting a business loan, your next step should be to start building your business credit. Secure all the licenses, tax ID numbers, registration numbers and permits required by your State. Register your company with a business credit tracker like Dun & Bradstreet or Experian Business as this is the only way your business transactions can be recorded.
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Be consistent in submitting your business loan payments. To build a solid business credit, you must avoid delays in the submission of your payments. Just as you need to be careful in your personal transactions to protect your personal credit, you need to the same care to your business accounts to build and maintain an excellent business credit.
How long will it take to build a separate credit history for your company? You may need to wait at least 12 months before you can completely separate your business credit from your personal credit. This means, the personal liability will still apply to your loan. As soon as you’ve reached a business credit status, request your lender or business credit card company to lift personal liability from your accounts.
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Pamela Williams is a Loan Consultant, Internet Marketer and Writer. For years she had helped consumers and business owners especially regarding business credit cards. This resource is dedicated particularly on business credit card reviews, articles, tips and advice, and online application so that consumers and business owners may compare which is the best business credit card for their business. Copyright 2010 |