Business Credit: Top 10 Myths-Part 2

February 25, 2010 By Marco Carbajo

Business Credit: Top 10 Myths

On the previous post I covered the first four myths on building business credit. I encourage you to bookmark these posts so you can revisit them at any time.

Here are the remaining myths of the top 10 surrounding the corporate credit industry:

6: All vendors, suppliers and lenders report to the business credit bureaus

Not true! There are over a half a million vendors and suppliers that are willing to extend vendor lines of credit to your business but less than six thousand of these companies report to the business credit bureaus. What’s even more alarming is not all of these companies report on a monthly basis either. Some only report to the business credit bureaus once every six months!

5: All business credit cards report to the business credit bureaus

Currently there are over five hundred business credit cards in the marketplace but less than forty will issue a card without requiring a personal credit check or personal guarantee. These select cards report solely to the business credit bureaus and not your personal credit reports. However, there are also a few business credit cards that require a personal guarantee but only report to the business credit bureaus.

4: Every business has a business credit profile with the business credit bureaus

A Dun & Bradstreet profile requires that a business owner first apply for a DUNs number and submit their business information. Corporate Experian and Small Business Equifax create a business profile report for your company once a lender or supplier that you have payment experience with submits a data record. There are many other business credit bureaus that require business owners to complete a registration process prior to creating a profile.

3: Buy a shelf corporation and get all the business credit you’ll ever need

Shelf corporations provide certain advantages when it comes to obtaining credit simply from the fact that a business that is five years old has a much greater influence to a lender than a business that’s been in business for a few months.

With that said a shelf corporation alone will not enable you to obtain all the credit you need because there are many other factors that are taken into consideration. For example, if you have a ten year old shelf corporation that needs a $100k business line of credit a bank will need to view your company’s bank rating, balance history, financials, tax returns, profit & loss statements and so on.

2: All you need is a strong paydex score to qualify for a business line of credit

While a strong business credit file does play a part in qualifying banks look at many other factors. This includes your bank rating, balance rating, NSF track record and personal credit scores.

1: All you need is an 80 paydex score to get unlimited business financing

This by far is one of the biggest myths in business credit because an 80 paydex score with Dun & Bradstreet is said to be like having a 720 personal credit score. While that may be true to some degree there are some important details that many fail to mention. For example, you can have four positive trade references reporting with $200 being the highest credit limit on all four accounts and still score an 80 paydex.

This is because DNB’s rating system requires a minimum of four positive trade references but if the four you have are small limits then this hardly qualifies your business to get approved for thousands of dollars of cash credit, lease credit, business loans and business lines of credit.

In addition, having only a DNB file is like having only one personal credit file with the credit reporting agencies. Let’s say all you have is a personal credit file with Equifax but have no file with Transunion or Experian. You would never be able to get approved for a mortgage because you don’t have a completed financial picture for lenders to review your creditworthiness.

This holds true for your business as well. In order to show a complete business credit report for your company then you will need to have a profile with the three main business credit bureaus.

Now that you know the myths surrounding the industry I encourage you to share this information with other small business owners and put your company on the path to corporate credit success!

Business Credit Resources

» Start Business Credit

» Business Credit Insiders Circle

» Business Credit Blog

To access business credit insider secrets, premium vendors, leasing companies, business credit cards, and lenders that report to all the major business credit bureaus become a member of my Business Credit Insiders Circle. Submit your name and email below for details and receive a free audio seminar ($597 value) =>

Marco Carbajo is a business credit specialist, author, speaker, and founder of the Business Credit Insiders Circle. He is a weekly columnist for Dun & Bradstreet Small Business Solutions, a business credit blogger for All Business & American Express Small Business and author of “Eight Steps to Ultimate Business Credit” and “How to Build Business Credit with No Personal Guarantee.” His articles and blogs have also been featured in Business Week, The Washington Post, The San Francisco Tribune, Scotsman Guide, Alltop, Entrepreneur Connect, and Active Rain.

Building Business Credit: 20 Steps to No Personal Guarantee

February 4, 2010 By Marco Carbajo

Building Business Credit

While obtaining business credit cards, small business loans and a business line of credit is the common objective for many small business owners the

re is a growing demand for learning how to qualify without having to use personal credit or a personal guarantee.

I’m happy to see that more and more business owners are embracing the idea of completely separating your personal credit from business credit. Many of

our new members were never aware of the danger that co mingling the use of credit profiles for personal and business can jeopardize the protection of the corporate veil plus limit the amount of funding their business can obtain.

Here are twenty steps to building corporate credit without using a personal guarantee. Please note that I’ve used examples from my business credit building system.

Incorporate your business and obtain a Federal Tax ID#- your Tax ID number will be the number that identifies your business and information. It’s just like how your social security number will identify who you are for personal credit.
Complete corporate conformity (411 listing, verifications, business license, etc.) –vendors, lenders and banks will do their due diligence prior to extending credit to your company. Don’t expect to receive credit by skipping these key fundamental steps.
Select the right business classification codes – avoid selecting codes that will trigger a red flag with the business credit bureaus and lenders. This can stop your business credit building efforts dead in its tracks.
Set up a complete profile with Dun and Bradstreet – Simply obtaining a DUNs number doesn’t cut it you will need to furnish additional information on your profile to give creditors a complete picture of your business. Remember there are companies like First Equity that offer no personal guarantee business credit cards but by invitation only. They purchase targeted lists from the business credit bureaus which you want your company to be on.
Add existing positive trade references – if you have existing trade references to add to your file then you may want to consider using DNB’s business credit builder program which allows you to add your own references but keep in mind there are certain references they will not accept.
Apply for vendor lines of credit – obtaining vendor credit can be simple and some suppliers even specialize in extending credit to startup companies or businesses with no credit at all. The key though is applying for credit with vendors that report each month and report the true credit limits your approved for. Keep in mind that we provide these to you as a member of our Business Credit Insiders Circle.
Pay invoices ahead of the due date – you can increase your paydex score to 90 or higher by simply paying your invoices 10-20 days ahead of the due date. A big plus on your files!
Build solid payment history – while account types and trade lines are a factor keep in mind that a payment track record is the final ingredient. Don’t think that one paid invoice will make your business capable of acquiring no personal guarantee credit lines or credit cards.
Monitor your business credit file – a no brainer and a good habit to adopt for your personal files as well.
Get listed with multiple business credit bureaus –target specific business credit bureaus that cater to your industry on top of the big three.
Set up a small business bank account –before selecting a financial institution for your banking make a list of the financial products you may need. Consider a credit union or community bank because they are much more flexible in today’s economic environment.
Establish a minimum ‘low 5’ bank rating – establish bank credit with your small business bank account.
Obtain secured business credit cards
Open a small business credit line
Establish a diversity of credit – build a strong business credit rating by obtaining different account types. This includes trade credit, revolving credit, loans and leases.
Keep proper financials
Establish a well written business plan – A business plan is your blueprint that outlines every necessary component for the success of your business. Enough said!
Maintain personal credit scores at 680+ – when applying for no personal guarantee credit a lender or creditor may still require a personal credit check.
Build large trade lines with multiple tiers of credit –you can request for a credit limit increase usually after six months of good payment history. Before applying for larger tiers of credit be sure to know what the requirements for approval are.
Stay informed! – join forums, social networks, read articles, subscribe to blogs and consider joining memberships like the business credit insiders circle.

Following these steps will provide your business opportunities to establish business credit in the name of your business while protecting your personal credit and personal liability.

Ready to start building your business credit? Become a member of my Business Credit Insiders Circle and gain access to a proven step-by-step business credit building system. A system that provides you access to vendor lines of credit, fleet cards, business credit cards with and without a PG, funding sources and lenders that report to all the major business credit bureaus. Submit your name and email below for details and receive a free audio seminar ($597 value) =>

To Your Success In Business and in Life!

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About the author

Marco Carbajo is a business credit expert, author, speaker, and founder of the Business Credit Insiders Circle. He is a business credit blogger for Dun and Bradstreet Credibility Corp, the SBA.gov Community, About.com and All Business.com. His articles and blog; Business Credit Blogger.com, have been featured in ‘Fox Small Business’,’American Express Small Business’, ‘Business Week’, ‘The Washington Post’, ‘The New York Times’, ‘The San Francisco Tribune’,‘Alltop’, and ‘Entrepreneur Connect’.

Business Credit Builder: Build Business Credit History in Record Time

December 2, 2009 By Marco Carbajo

Getting listed by using one of DNB’s business credit builder products is one way to get your company on the fast track to build business credit history fast. Once you’re listed you should focus your attention on getting positive payment experiences added to your file in order to generate history and favorable business credit scores.

This can seem like a tough task because you have to make sure that the suppliers, vendors, and lenders you have an already existing payment experience with will now start reporting to your newly established business credit files.

In addition, there is no way for you to confirm which company is reporting to your file because the business credit bureaus do not disclose what business is supplying the payment data.

Plus, you have to worry about new vendors and suppliers reporting as well. One of the biggest mistakes made by small business owners is assuming that every vendor reports their payment history to their corporate credit file.

Last but not least what if the specific vendor or supplier your business has a good history of payment experience with is not set up to supply payment data to the business credit bureaus? One of my new clients who had been in business for over 15 years recently got listed with Dun & Bradstreet and contacted one of his suppliers to let them know of his new DUNS number. He was excited because he had a 10 year solid track record of payment experience with them and knew that this could benefit his newly established corporate credit file. Unfortunately this supplier was not a trade reporter with D&B so needless to say he was not happy.

Fortunately for you and my client there is a way to solve all these challenges and build company credit in record time!

One of the largest credit builder companies, Dun & Bradstreet offers a unique program ideal for new businesses that need to quickly build business credit history. With this program you have the ability to submit your company’s trade references that D&B will contact to collect payment experiences and report them to your file.

This allows you the opportunity to add your company’s good trade references to your business credit file with D&B and it doesn’t even require them to be a trade reporter with D&B. Best of all you can establish a Paydex score in a matter of weeks depending on how many references you supply to D&B to contact.

One very important thing to keep in mind is you cannot submit credit cards, gas or utilities as trade references to D&B.

The two business credit builder services I’m referring to are CreditBuilder Plus™ and CreditBuilder Premium™.

This is how you can build a business credit file in record time and benefit from doing what you’ve always done as a business owner. The only difference is now you have a business credit report that shows how responsible your business is in handling its financial responsibilities. This can make the process of obtaining credit and business financing for your company much easier.

*You can add trade experiences using D&B’s program but be prepared to pay a substantial fee. This is an option but keep in mind there are other business credit bureaus you will also need to establish a file with such as Corporate Experian and Small Business Equifax. To access premium vendors, leasing companies, business credit cards, and lenders that report to all the major business credit bureaus become a member of my Business Credit Insider’s Circle. Submit your name and email below for details and receive a free audio seminar ($597 value) =>

To Your Success!

Marco Carbajo

About the Author

Marco Picture 2009 Super Small pic

Marco Carbajo is a business credit specialist, author, speaker, and founder of the Business Credit Insider’s Circle. He is a weekly columnist for Dun & Bradstreet Small Business Solutions, a business credit blogger for All Business & American Express Small Business and author of “Eight Steps to Ultimate Business Credit” and “How to Build Business Credit with No Personal Guarantee.” His articles and blogs have also been featured in The Scotsman Guide, Alltop, Entrepreneur Connect, and Active Rain.

Are Business Charge Cards A Better Alternative to Business Credit Cards?

November 30, 2009 By Marco Carbajo

Business Charge Card

Even though business credit cards allow you to make purchases and carry a balance from one billing cycle to the next the disadvantage of having to pay interest on that balance can become pretty costly.

Another kind of credit card for your business that may be a better alternative is the business charge card.

A business charge card is a specific kind of credit card that has all the convenience of a credit card without the costly interest. The balance on a charge card account must be paid in full when the statement is received and cannot be rolled over from one billing cycle to the next like a credit card. Because you can’t carry a balance, a charge card doesn’t have a periodic or annual percentage rate, so there is no rate for a charge card issuer to disclose.

The specific impact to your business credit bureau is significant because charge cards will not allow you to incur a revolving debt like a credit card will. The larger the balances you carry on your business credit cards the more harm it can cause in your overall debt to credit utilization.

Here is a list of several business charge cards available in the marketplace:

OPEN from American Express offers business card members the OPEN Savings program designed for companies with 100 or fewer employees. Some perks include 5 percent to 20 percent discounts on shipping, travel and business services.
Diners Club International has been a leading charge card for business travelers since the 1950s. Features include club rewards, cash access, airport lounge program, a 24-hour emergency travel hotline and a rental-car insurance program.
Universal Air Travel Plan is accepted by over 250 airlines and thousands of travel agencies for air travel, service fees and management fees. It’s best for companies that want to restrict charging to airline-related expenses.
The American Express Corporate Meeting Card allows all event-related expenses to be charged centrally, so hotel rooms, meals, transportation, and so on, all go on a single bill.

While using a business charge card makes much more sense than a business credit card there several other important things to consider.

First, a business charge card should only report your payment experience to the business credit bureaus and not your personal credit files. This prevents you from putting your personal credit scores at risk every time your company makes a purchase using your company charge card.

Secondly, some charge cards like Diners Club International will self contain your payment experience and will only report to the business credit bureaus if your account becomes delinquent. While this is good for protecting your personal credit scores it does not help your business credit file because they do not report your positive payment history.

Keep this in mind if you decide to start shopping around for a new business charge card that does not impact your personal credit. Pay special attention to the fine print and don’t hesitate to call and ask questions pertaining to how your payment experience is reported.

One of my favorite types of charge cards is ones that base their approval solely on your business’s credit worthiness. This type of card is the best of both worlds! Once approved your payment history reports solely on your business credit and there is no personal guarantee keeping the liability strictly tied to your business.

I encourage you to be as proactive as possible by selecting business charge cards that report to the business credit bureaus. Don’t hesitate to inquire with vendors, suppliers, and leasing companies how they report your payment experience with them as well. Bottom line it’s smart business to use business charge cards in order to save thousands of dollars in interest and build business credit history.

To Your Success!

Marco Carbajo

About the Author

Marco Picture 2009 Super Small pic

Marco Carbajo is a business credit specialist, author, speaker, and founder of the Business Credit Insiders Circle. Want to learn more about how you can start business credit? Become a member and gain access to Marco’s business credit secrets, sources, and information on how to obtain unlimited financing for your business without a personal guarantee? Claim his FREE ‘Eight Steps to Ultimate Business Credit without a Personal Guarantee’ audio seminar ($597 Value), for a limited time by submitting your name and email below =>

Are You Getting Instant Business Credit?

November 17, 2009 By Marco Carbajo

If you’re at the beginning stage of applying for business credit for your company than you have probably seen the numerous articles, books, and posts explaining the importance of first starting with vendor credit also known as trade credit.

However, one of the biggest mistakes made by small business owners during this stage is applying for the wrong vendor accounts that grant instant business credit.

While some may have a tendency to believe that the more the merrier is a sound strategy I tend to totally disagree. The reason is simply getting approved for vendor credit is one thing but what really matters is three critical factors that seem to never get mentioned which are:

Reporting

Frequency

High Credit

Reporting

There are over 500,000 vendors extending credit to businesses, but less than 6,000 of them report to the business credit bureaus! So part of any sound business credit building strategy should include careful selection of vendors that report to the business credit bureaus. It’s also important to note which business credit bureau they report to.

Frequency

In addition you will need to select vendors that not only report to the business credit bureaus but also report on a monthly basis.
Why is reporting on a monthly basis so important?

The reason is there are vendors who do report your payment history but only on a quarterly or even yearly basis. Time is of the essence so if your payment experience is not reporting until months later this can drastically impact the speed in which you plan to build a strong business credit file.

An example of an instant business credit vendor that reports on a monthly basis is a company like Quill.

Quill sells office supplies, cleaning supplies, packing and shipping supplies, school supplies, printing supplies, and more. From filing and storage to hand held computers, Quill has a wide range of discounted top name brand products.

Quill offers a net 30 account and reports to Dun and Bradstreet. Best of all they report your payment history every 30 days. For small orders you can get approved with a listing on the 411 directories and have a working website. New businesses can start out with smaller limits that will increase when you pay on time every month.

High Credit

Unfortunately there are vendors who report the balance owing as your high credit limit on your business credit file and not the true credit limit your business has been approved for.

For example, let’s say you’re approved for a $2,000 credit line with a vendor and you purchase an order of $50.

The incorrect reporting by this vendor shows:

High Credit ($) 50

Now Owes ($) 50

The correct reporting by the vendor should reflect:

High Credit ($) 2,000

Now Owes ($) 50

It’s always best to select vendors that report the true high credit limit that your business has been approved for and not just the balance owing.

This factor alone can impact the credit limit recommendation suggested for your business which is provided by the business credit bureaus in your profile report.

While you can obtain instant business credit for your business the process of building a strong business credit profile and score does take careful planning and a sound strategy. By revealing these three critical factors I hope to make the process easier and more effective for you.

As long as you select vendors that report, select vendors that report timely and select vendors that report true high credit limits than you are well on your way to business credit success!

To Your Success!

Marco Carbajo

About the Author

sp_image-435950341-1242740704.pjpeg

Marco Carbajo is a business credit specialist, author, speaker, and founder of the Business Credit Insider’s Circle. Want to learn more about how to build business credit and obtain unlimited financing for your business? Claim Marco’s popular FREE “Eight Steps To Ultimate Business Credit Without A Personal Guarantee Audio Seminar“($597 Value), available by simply submitting your email below=>