Jan 14 2020

#I have poor credit and need a personal loan ) #Video

#I #have #poor #credit #and #need #a #personal #loan

I have poor credit and need a personal loan


How to build business credit with poor personal credit


In a Nutshell

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Of course, the offers on our platform don’t represent all financial products out there, but our goal is to show you as many great options as we can.

This offer is no longer available on our site: Ink Business Cash℠ Credit Card

Confused about how to build business credit? You’re not alone.

Many business owners and entrepreneurs don’t realize the key differences between business credit and personal credit, so let’s start there.

Your business credit and personal credit aren’t linked — but they may be related.

Business and personal credit contains different information, so the scores aren’t necessarily correlated. But if you’re a sole proprietor, it’s a good bet that banks and other lenders will reference your personal credit to see how well you manage debt.

“Many lenders review your personal credit before extending business credit,” says Caton Hanson, co-founder and chief legal officer of Nav, a company that helps business owners understand and monitor their business credit.

This is especially likely if you sign a personal guarantee when taking out a small business loan or opening a business credit card. A personal guarantee basically ensures you’ll be personally liable for the debt — a situation you want to avoid if possible, as it could put your personal assets at risk.

While your business credit and personal credit may be related in certain cases, you can take steps to separate them as your business grows.

If I have poor personal credit, will my business credit be poor, too?

Building business credit can take time

Even if you never plan on taking out a loan or tapping a line of credit, it can’t hurt to build your business credit. In fact, your business insurance premiums, equipment or office lease agreements, vendors’ terms, and ability to work with other companies could be influenced by it.

The good news? You can take steps to build your business credit even if your personal credit isn’t great. And once you’ve established good business credit, you may be able to qualify for financing without a personal guarantee.

Here’s how you can start:

  • Incorporate and establish your business.
  • Scan your business credit reports for errors.
  • Establish trade lines.
  • Pay on time — even better, pay early.
  • Keep working on your personal credit.

1. Incorporate and establish your business.

The credit bureaus need to know your business exists before they can create credit reports for it. Here are some of the steps you may have to take to start building business credit:

Incorporate your business or form an LLC (limited liability company). This ensures your business entity will be separate from your personal identity.

Get a federal employer identification number (EIN). This is a free service offered by the IRS, and it also serves to identify you as a business entity. Apply for an EIN here.

Open checking and savings accounts for your business. Make sure you use your legal business name for any of your business banking accounts.

Get a dedicated business phone line. You’ll also want to make sure it’s listed under your legal business name.

Register with Dun & Bradstreet to get a D-U-N-S Number®. This is a nine-digit number used to identify each physical location of your business. It’s free for all businesses required to register with the federal government for contracts or grants. Get one here.

2. Scan your business credit reports for errors.

Business credit reporting agencies gather information from a variety of sources. Your business credit reports may include:

  • Your company’s contact information.
  • An overview of your business type and industry, key personnel, number of employees, years in business, subsidiaries and branches, and sales.
  • Financial data, including your business’s estimated sales, available credit, historical use of credit, payment history, credit inquiries and collection accounts.
  • Public records information, such as tax liens, judgments, lawsuits, bankruptcies or fraudulent activity related to your business.
  • Depending on the type of report, it may also contain a business credit score, recommendations from the business credit reporting agency for how much credit lenders should extend to your business and predictions from the business credit reporting agency on how likely your business is to fail.

Make sure the information in the reports is accurate and contact the bureaus individually to report and correct errors.

Wait… there’s more than one type of business credit report?

3. Establish trade lines.

While a lot of information can wind up on your business credit reports, trade lines can be particularly important.

Business trade lines are lines of credit established between a business and a vendor, such as an account with an office supply company where the company allows the business to pay the account balance several days or weeks after receiving the inventory.

Vendors may report this account to any reporting agency, but they’re not required to do so. Depending on the type of credit report, a trade line that’s reported may include information such as your available credit, the amount owed, the terms of the account, recent activity and when you pay, relative to your due date.

You could have a business credit report without any trade lines, but it may be hard to build business credit without any. This is because your number of trade lines and your payment history may be factors in your business credit file.

Here’s where you need to watch out: Not every vendor will report your payment activity. So even if you always pay your vendors early or on time, you may not be building your business credit.

If you’re trying to boost your business credit, you may want to start opening business trade lines or accounts, such as a business credit card, with companies who report to the business credit reporting bureaus.

Just be careful about opening an account with an annual fee, as you don’t want to have to pay just to keep an account open and you may be able to find more cost-effective options.

One of our favorite business cards with no annual fee is the Ink Business Cash℠ Credit Card.


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