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Separating Your Personal And Business Credit
By: David Gass
Did you know that with one simple step you will increase your chances of
obtaining business financing by more then 300%?
Lending institutions don't always tell you all the requirements and where they
go to qualify you and your business, before you apply for financing. A
significant step in qualifying you and your business is to pull your personal
AND business credit. Do you know what your credit reports look like?
As an expert in the small business credit industry, it's been my experience that
fewer than 10 percent of entrepreneurs know about or truly understand how
business credit is established and tracked; and how it affects their lives and
businesses everyday.
Last month I spoke with a potential client (J.G.) who had questions about his
credit situation. J.G. is a typical small business owner, who runs a small
retail store in southern California and generates a decent profit.
In the good years he is able to take his family on a trip to Hawaii for a week.
Something they all love to do. J.G. told me that he just applied for a mortgage
on a new home and was denied. He started his business three years ago and never
had previous credit problems. He couldn't understand why he was refused because
he paid his personal bills on time.
I asked if he had opened any lines of credit for the business in the last three
years. He said one line of credit with a bank for $60,000, but nothing else. I
then asked if he had received credit or terms to pay suppliers for his retail
store any time since starting the company. “Oh Yeah. Of course,” he said. Here
is where the problem arose for J.G. His retail store needed several suppliers
for all the products he sells. Unfortunately J.G. had applied for credit with
each of these suppliers under his personal name during the last year. I asked if
he paid all of those bills on time. “Not all the time, but the latest I ever
paid someone was 60 days late.”
I cautioned J.G. that obviously not paying bills on time would damage his credit
and that there were many other variables that determined his personal credit
score. If you want just a simple system to keep your credit in good standing
consider this one simple rule, make sure your debt load is no more then 25% of
your gross income, even though many banks will lend at 33% to 38%.
About the Author:
David Gass is the President and Founder of Business Credit Services Inc. His
company provides coaching programs for small business owners and has developed a
patent-pending process for building business credit In addition the company
offers incorporation services and business plan writing. Learn more at
http://www.businesscreditbuilder.net |
