QUESTIONS
ABOUT BUSINESS CREDIT
Business
Credit - How to get it?
Why
Do I Need Business Credit
Building your business
credit will improve your business with the following:
- Save time and money for your
business.
- Meet any current lending needs.
- Prepare for any future lending needs.
- Have cash in your business when it's
needed.
- Ability to extend your cash flow.
- Lower your interest rates.
- Build credibility for your business.
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Mystery
of Business Credit
If
you don't know the answer to any of
the questions below, you are among thousands of business
owners who are lost in the maze of how to build business credit.
We can provide you the answers to the mystery.
- Who are the largest business credit bureaus?
- What rights does a business owner have
for incorrect information on a credit report?
- What are the business credit scores?
- What do business lenders look at?
- Where do you find companies that grant
credit?
- How do you get a company to grant credit?
- Which companies report to the business
credit bureaus?
- What credit cards companies do not require
personal guarantees?
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Advantages
of Having a Business Credit Profile
Just by building
a business credit profile you will be able to limit the
use of your personal guarantee and build business credit
regardless of your personal credit history.
- You will have more cash for the business.
- Convenience in purchasing.
- Protection of your personal assets from that of the business.
- Limit your personal liability from the business.
- No need for personal credit checks.
- Purchase vehicles with no personal guarantees.
- Purchase equipment, computers and more with your business credit.
- Preparing your business for future lending needs.
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Separating
You From Your Business
You can separate
your personal liability and protect your personal assets
from that of the business just by incorporating. It is possible
to build a business credit profile for a sole proprietorship
or partnership however you are still responsible for all
the debts of the company. We recommend building your business
credit as a corporation or limited liability company. Other
advantages of a corporation are:
- Separates you from your business.
- Limited liability of the owners and officers.
- Lower tax liability.
- 100% tax deductible insurance.
- Reimburse 100% of medical expenses.
- Corporate image.
- Raise capital and build credit faster.
- Lower your audit risk as a small corporation.
- Stock ownership - easier to transfer
assets.
- Protect Your Personal Assets.
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Biggest
Advantage of Having Business Credit
The biggest advantage
of having a good business credit profile is saving money.
By obtaining a more favorable credit score you will
lower the interest you pay on loans and leases. For
example:
|
EXAMPLE
10 year payback
|
Good
Credit Score
|
Average
or No Credit Score
|
|
Loan
Amount |
$100,000 |
$100,000 |
|
Length
of Loan |
10
years |
10
years |
|
Interest
Rate |
7.5% |
10.5% |
|
Payment |
$1,187.02 |
$1,349.35 |
|
Total
Interest Paid |
$42,441.99 |
$61,921.99 |
|
|
Total Savings
For Having Good Credit $19,480
|
|
| EXAMPLE
5 year payback |
Good
Credit Score |
Average
or No Credit Score |
|
Loan
Amount |
$100,000 |
$100,000 |
|
Length
of Loan |
5
years |
5
years |
|
Interest
Rate |
7.5% |
10.5% |
|
Payment |
$2,003.79 |
$2,149.39 |
|
Total
Interest Paid |
$20,227.75 |
$28,963.40 |
|
|
Total Savings
For Having Good Credit $8,685.6 |
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Business
Credit Agencies
There are several
business credit reporting agencies in the United States
that lenders and financial institutions rely on for information
to grant credit. Many businesses can take years before they
are listed with the business credit agencies, some may never
be listed. One of our clients had been in business 26 years
and not one bureau had his company listed. Some of these are
FDInsight, D&B, Experian Business, BusinessCreditUSA
and ClientChecker. The following is a brief explanation of each.
FDInsight
- Relatively new to the business credit market.
- Originally made its mark as a personal credit reporting agency for mortgage brokers.
- The second largest credit reporting company in the mortgage broker field.
- Information on businesses is provided by the business or a third party and then every piece of information is verified by the staff of FDInsight.
- They arguably provide the most accurate business credit report in the industry.
- The company is listed on NASDAQ as FDCC.
D&B
- Over 70 million businesses are registered with D&B.
- The credit profile created by D&B uses information provided by the business owners and vendors of the business.
- Grants a PAYDEX score to businesses based on payment experiences of the business.
- Issues a DUNS Rating based on the financial statements of the business.
- Has a High Risk status for companies that will destroy their ability to obtain credit if D&B finds information on a company they feel to be inconsistent with their model.
Experian Business
- Over 14 million businesses are registered with Experian.
- The credit profile created by Experian uses information provided by vendors only.
- Grants an Intelliscore based on payment experiences.
- One of the three largest personal credit bureaus.
BusinessCreditUSA
- A division of InfoUSA.
- Provides inexpensive business credit reports.
- Relies on information from the business owner.
- Verifies all information presented to them before placing on the report.
ClientChecker
- Only credit reporting agency dedicated to small businesses.
- The credit profile created by ClientChecker uses information provided by vendors only.
- Grants a PayQuo Score based on payment experience.
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Business
Credit Scores
The
business credit scores are what the lenders and financial
institutions look for to determine credit worthiness of
a business. The score alone will not determine approval
of a loan or lease. Many factors will be reviewed to determine
approval. As with a business credit profile, a score too
can take several years to obtain. Many businesses never
obtain a score, because they don't know it's available or
they don't know how to get one.
PAYDEX Score - D&B
- Score ranges from 0 to 100.
- A score of 75+ is good.
- Based on payment experiences reported by vendors.
- Need minimum of 5 trade references who report to D&B; can be as high as 8.
Intelliscore
- Score ranges from 0 to 100.
- A score of 75+ is good.
- Based on payment experiences reported by vendors.
- Need a minimum of 3 trade references who report to Experian.
PayQuo Score
- Score ranges from 20 to 90.
- A score of 80+ is good.
- Based on payment experiences reported by vendors.
- Need 3 trade references who report to ClientChecker.
DUNS Rating
- Various rating schedules.
- Based on employee size and financial statements.
- Also takes into account payment history.
Other Bureaus
- Other bureaus do not have a specific scoring system to provide credit grantors.
- Some of the bureaus are working on a scoring model to implement in the future.
Free 30-Minute Consultation!
Call Fast Business Credit Today at
1-888-313-6333! |
