The Biggest Business Credit Myth

Can you establish good business credit if you have bad personal
credit? Of course… however, there are a number of important
stipulations that you should be aware of.

In order to properly build business credit, you must have a
proper business structure set up. This means that there must be
a separate legal entity that you run your business from, one
that is separate from your personal credit file, sole
proprietors are out! It is preferable that you have a
corporation or an LLC in place.

Even if you have been in business for years, you may not have
years of business credit history. Usually the business owner
will be required to personal guarantee some of the initial
business funding at the banking level. Once you build and
establish your business credit history then you have more
options to drop the personal guarantee.

Many business owners do not realize that there a two types of
business credit, namely trade credit and cash credit. Trade
credit is where a vendor issues your company a credit line. The
credit can only be used at vendor that issued your business the
credit. An example would be an office supply store, they may
issue the business a $5000 credit line, the credit line can only
be used at that office supply store.

Trade credit may be useful for some businesses; however, most
businesses need cold hard cash! This is where business credit
really comes to life. As you build and increase your trade
credit you better your chances for higher lines of cash credit.
Lets be honest, the main reason business owners build business
credit is to obtain working capital. Trade credit is an
important part of the business credit building process, but it
is only a stepping-stone to cash credit.

The biggest myth about building business credit is that many
business owners think that they can build good business credit
to make up for the fact that they have bad personal credit. You
can absolutely build good business credit regardless of your
personal credit, but most of the credit you obtain will be trade
credit. If you are looking for cash credit banks will require
that you disclose the social security number of the business
owners. This means that they will be pulling a personal credit
report to verify that you have good personal credit. The banks
will want to see a 640 or above in order to obtain business

If you have bad personal credit, it is recommended that you
build business credit while you work on repairing your personal
credit. In order to take full advantage of business credit you
should have two good credit scores…personal and business. It is
important to realize, if you build you business credit properly,
it will not show up or harm your personal credit file.

Corporate Credit Concepts makes it easy to establish business
credit. To obtain your free report on how to build business
credit and obtain Unlimited Financing click here.>