Business and Personal Credit
Corporations and asset protection…That is how the wealthiest people in America protect themselves. You’ve probably heard stories of CEOs and famous people that make big money, yet never run into trouble. What would be disaster for us, is a simple transfer of their assets and money for them.
• Entrepreneurs
• Business Owners
• Real Estate Investors
• People looking to start a business
• Those with personal or business debt
• Self employed
• Network Marketers
• Anyone with a corporation, LLC or any other entity
• Anyone that wants to grow or expand their current business
Both business and personal credit cards are good ways to get lines of credit for business expenses. However, one wrong step and you’ll kill your chances for getting the most amount of credit that you could possibly receive.
If you own a business now, then you know that CASHFLOW is the single most important element to not only keep the bills paid but also in case of an emergency. Cash comes in and cash goes out and if something unexpected comes up then you’ll end up shutting the doors.
In today’s day and age, you MUST not only protect your personal credit score, as your whole life is centered around it, but you want to protect all your assets, whatever they may be. It is a good idea to keep your personal credit and your business credit separate.
With business credit, when structured properly, you can use your entity to guarantee money that it borrows and not have it show up on your personal credit file.
Personal credit is based off of your social security but in the business world, credit is established off of your corporation’s Tax ID.
You could establish credit on each and every one of your businesses which could be formed under separate entities or corporations. This is one way to build credit, protect your assets, and write off certain expenses for a tax advantage.
For instance, in a C Corporation, they have a safety award. If any of your employees (you could hire your children to work for you) go an entire year without hurting themselves they could be considered for a safety award which is a write off to the company of $1,600 Dollars.
Getting lines of credit for your business starts with being incorporated. You’ve got to form a C Corp, an LLC, and possibly a Trust.
When your corporation starts to get unsecured lines of credit, makes purchases, and pays it back on time - it starts building good history and eventually you may get $50,000. or more. And although banks make money off of lending money some offer 0% interest for a period of time.
Just like in the personal credit world, there are credit bureaus in the business world:
1. Dun & Bradstreet
2. Corporate Experian
Dun and Bradstreet, aka D&B, identifies your company or business by a DUNS number. With D&B your corporation is rated on a scale from 0 -100. This is a PAYDEX score and you want your business to have at least an 80 score. For personal credit the range is 350-850.
It is best to acquire a credit card online without showing financials, business plans, paperwork, or walking into a bank. How do you get an 80 score?
Well, what you have to do is you have to go to five vendors that report back to Dun & Bradstreet. These vendors are stores that you do business with.
1. Go to store
2. Apply for credit
3. Get credit from store
4. Go use your credit and buy stuff
5. Make payments on time
6. Repeat steps 4 and 5 for four consecutive months which will be the time needed to report to the credit bureaus.
Vendors will extend you credit without asking for your social security number.
Experian is very similar to Dun & Bradstreet, with a few exceptions. With Experian, your company gets a rating, which they call an Intelliscore. It’s the same range, 0 – 100. You want an 80+.
They only require 2 vendors to report before you get a score.
There are 2 kinds of business credit. The first one is called Trade Credit.
Office Depot, Home Depot are 2 examples that offer trade credit but there are many. This is how you are going to build your credit lines.
The second kind of credit is cash credit. With cash credit you can buy anything personal or for your business but keep them separate. Office supplies are a business expense, but so is going out to dinner as long as business is discussed.
If you build your business the right way, the banks will start sending you offers in the mail.
Dun & Bradstreet and Experian are in the business of selling your company’s info to the banks, lenders and creditors. They are looking for companies in good standing.
In the business credit world you project what your business will make, not what you are making right now. The more you state you may have to prove through business plans and financial statements. However, if you project low earnings for your company, you won’t get credit.
We will give you sources where you can go for business and personal credit and to form corporations. In the meantime, please sign up for our newsletter(s): http://interactive-media-network.com/recommends/?p=subscribe&id=5