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Building Good Business Credit After Bad Credit
Can you establish good business credit if you have bad
personal credit? The answer is yes...but with a few caveats.
Business credit reports and personal credit reports are
generally completely separate databases for legal reasons.
However, there are some exceptions in terms of how independent
that information may be:
-- If you are operating as a sole proprietor or Limited
Liability Company, it is difficult to separate your personal and
business credit. A corporation is a much better structure to
build a completely independent business credit report.
-- Experian sells a credit score that is a combination of the
business owner's personal credit history and the businesses'
credit history.
In the early years of a business, the owner will almost
certainly be required to personally guarantee loans. However, as
you establish a strong business credit rating for your
enterprise, you'll have more leverage to negotiate for a loan
without your personal guarantee.
A warning: some people try to use business credit file to
repeat bad credit habits.
"I've seen people who ruined their own credit go out and start
a business, enlist the help of people with good personal credit
to be executives in the company, and get major credit cards. They
didn't have a real product or service, and the objective was to
just get credit. They would inevitably default on the corporate
credit lines," says Erik Salmon, Director of Business Credit
Services for Innovative Business Services (IBS) and an
experienced business credit coach. If that's your intention in
establishing a business credit rating, you're better off taking
some personal finance courses to learn how to manage your
money.
If, however, you legitimately want to make a go of a business,
have a solid plan, and are willing to do what has to be done to
get it off the ground, then you should let a bad personal credit
rating stop you. Building or rebuilding good credit - whether
it's personal credit or business credit - is a process. Be
patient as you work on both your personal and business credit.
The results will be worth it. For more information, visit
www.businesscreditsuccess.com.
Gerri Detweiler is considered one of the country's top credit
experts. She has been interviewed for thousands of radio,
television and print newstories including USA Today, The Wall
Street Journal, The New York Times, Dateline NBC and many others.
She has testified before Congress several times and worked on
reform of the national credit reporting laws.
MORE RESOURCES:
Credit - Google News
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