Many business owners across the country have experienced the cold shoulder from their banks and seen their credit lines reduced as a result of rising losses, the credit crisis, and economic uncertainty. With all the doom and gloom it's time to start spreading some positive news regarding credit cards for small business.
While major credit card issuers like Advanta have left the business earlier this year it's refreshing to see that banks like J.P. Morgan Chase card services recently announced that it plans to launch four more credit cards specifically targeted at small-business owners! Among them will be a credit card that requires the cardholder to pay their balance in full each month similar to Amex's card.
Richard Quigley, president of Chase Business Cards said "It's really going to be small businesses that are going to help pull the U.S. out of the recession." Now we have all known this from the very beginning of this financial mess but it's about time that these national banks realize it and do something about it.
Even though this is good news for small business owners there are some that see this as a strategy that banks are pushing simply because business credit cards aren't covered under the new regulations that restrict issuers from raising rates and fees on consumer credit cards.
Whatever the reason is I believe that the more options we have when it comes to business credit cards the better. Hopefully Chase will roll out some true business credit cards but I do like that they are introducing more options for the business credit card market.
Competition is always a good thing and when it comes to business credit cards the winner is the small business owner! For example, Chase's Ink Bold card-the first charge card offered by a Visa or MasterCard issuer-is aimed at business owners who want to avoid paying interest charges. It comes with a variable credit line that automatically adjusts to the business owner's spending patterns. Annual fees are $95, but the first year's fee is waived.
Here are some other aspects to Chase's new small business credit cards:
InkSM Bold- Chase's first pay-in-full charge card with no interest charges
Ink Bold has no annual fee for the first year and $95 thereafter
InkSM - developed for small business owners seeking business-sized credit limits, flexible payment options and online expense management tools with the ability to earn rewards from business purchases with no limit on how many points may be earned and the points do not expire.
Ink has no annual fee.
InkSM Plus - the solution for small business owners seeking business-sized credit limits, flexible payment options, online expense management tools and the ability to earn rewards from business purchases including extra travel benefits with no limit on how many points may be earned and the points do not expire. Rewards points also are worth 25 percent more when redeemed for air travel through Ultimate Rewards' and card members can earn an annual spend bonus of up to 25,000 points.
Ink Plus has no annual fee for the first year and $60 thereafter.
InkSM Cash - designed for small business owners seeking unlimited cash back and accelerated earnings on everyday business purchases: dining, fuel, home improvement and office supplies. Ink Cash provides business-sized credit limits, flexible payment options and online expense management tools.
Ink Cash has no annual fee.
As traditional loans dry up, banks are funneling more of their small business lending through credit cards. Since April, the top TARP recipients have cut their small business loan balances by $8 billion. With more business credit cards that will continue to hit the marketplace it's important that you choose wisely. A true business credit card should report your payment experience to the major business credit bureaus not the consumer reporting agencies.
While many small business owners realize the benefits of starting business credit there are many mistakes that are made in the business credit building process. I felt that compiling a list of the most common mistakes I've seen throughout the industry can serve as a helpful guide to you. Here they are...
Choosing the wrong entity structure
Selecting the right entity structure for your business is the most important step you can make. Not just from a business credit standpoint but also from a tax and asset protection standpoint as well. In addition there are state filing fees, franchise fees, licenses, resident agent service and a host of other important factors to consider.
Selecting the wrong SIC code
There are certain codes that the business credit bureaus and lenders tend to stay away from. These industries include real estate investing, car sales, adult entertainment, travel, lending, restaurants, and dry cleaners. When you classify your business be sure to stay away from these classifications.
Selecting the wrong NAICS code
If you plan on investing in real estate then you will want to make sure that the company you build credit on is not "real estate investing". Most banks will automatically turn you down because this is a high risk category. You still will be able to invest in real estate but you may have to set up a business that does business development, business consulting, marketing & advertising, training and development, etc. and then operate your real estate investments from a separate division or company that does something else.
Using a home or cell phone number as a business phone number
There's nothing wrong with using these phone numbers but when it comes to building business credit it does matter. Your number has to be listed in the 411 national directories and cell phones and VOIP as well as call forwarding numbers do not work.
Having inconsistent information on business documents
When building business credit you must pay close attention to details. The information used to open your credit file must match the information you use on applications, documents, and filings.
Applying for credit with the wrong vendors
There are 500,000 vendors in the U.S. that extend credit to businesses but less than 6,000 report to the business credit bureaus. Too many make the mistake of believing that simply doing business with a vendor will result in establishing business credit. Not true!
Applying for credit with vendors that report slow
There are vendors who do report your payment history but only on a quarterly or even yearly basis. Time is of the essence so you have to make sure the vendor you apply with also reports to the business credit bureaus on a monthly basis!
Applying for personal credit cards disguised as business credit cards
Pay special attention to what a credit card application requires and what the terms and conditions are. A credit card that reports only to your personal credit is not a true business credit card
Applying for business credit cards that do not report to the business credit bureaus
There are over 500 business credit cards available in the marketplace but less than 70 report your payment history to the business credit bureaus.
Not establishing an effective bank rating
A minimum of a low 5 bank rating is a must if you plan to apply for a line of credit or loan. You can achieve a low 5 rating with a $10k balance in your account.
To access my exclusive business credit directory of vendors, suppliers, credit cards, and companies that report to the business credit bureaus join my business credit community by clicking here. You can save a lot of time and guesswork as a business credit community member.
Remember - One sure-fire way to stay creative: force yourself to learn something new. ~Harvey Mackay
To Your Success!
Marco Carbajo
About the Author
Marco Carbajo is a business credit specialist, author, speaker, and founder of the premier business credit community, StartBusinessCredit.com. Want to learn more about how to build business credit and obtain unlimited financing for your business? Claim Marco's popular FREE business credit seminar ($597 Value), available at:=> http://www.businesscreditblogger.com
The American Express card has spent years and years branding itself as the card you can't leave home without. While the AMEX card has been one of the consumer's preferred credit cards to own not much has been discussed when it comes to the way it reports the payment history of it's customers.
While the majority of the media is focusing on credit lines being reduced, bank failures, and so on I want to address something that knowone seems to know about or pay attention to. Back in 2007 only after numerous consumer complaints nationally Capital One finally started reporting the true credit limits of it's customers after years of only reporting the maximum balance used on consumer's credit cards.
These credit limits showing on your personal credit profile have an important impact on your credit score because it reflects your true debt to credit limit ratios.
Unfortunately, some creditors like American Express have not adopted this practice and as a result millions of consumers are left out of the dark when it comes to ensuring their owntrue credit limits are being accurately reported on their credit reports to this day. This of course impacts the credit score and impacts what type of interest rate and/or loans a consumer qualifies for.
American Express and HELOC
American Express and HELOCS (Home Equity Lines of Credit) are known for not reporting the accurate credit limits of an account. For example, the American Express green card does not have an actual credit limit so the limit reported on the credit report of the consumer is actually the maximum amount that you have ever spent on that card. So if all you have ever charged on your AMEX was $3,000, and you paid it in full when the statement came and then you spend another $3k the following month, the $3,000 limit reported would show that you are using your card at 100% of your credit limit.
So what's the solution?
Until AMEX comes to their senses and starts reporting the true credit limit of it's customers you have to meet them at the court and play the game.
You basically have the power to set your own credit limit with AMEX on your credit reports. The question is what's the percentage you want to shoot for on your debt to credit limit ratio with AMEX? No more than 30%! So, if you know that you regularly charge let's say $3,000 per month on your AMEX then you want to make sure that the true credit limit reporting for your AMEX account on your credit reports is $10,000 or more. Why? Because if your limit reporting is $10,000 for AMEX and your charging $3k monthly then you are right at 30%, therefore your score will boost tremendously!
How do you set your own credit limit?
To increase and leverage that AMEX credit limit higher on your credit report, you should use your AMEX card and spend over $10,000 such as travelers checks or something like a TV then pay it off when the statement comes. Be sure to only set your limit if you know you can pay the balance in full when your statement comes in! The last thing you should do is go into debt simply for the purpose of raising your true credit limits with AMEX.
So once your statement comes in pay it in full. Next, go back to spending $3,000 again like normal. Your AMEX credit reporting limit would then increase to $10,000 as your limit and your regular spending habit of $3,000 would be below 30%.
You will need to reset your limit again in about 7-8 months so keep that in mind. This insider secret is priceless and this strategy alone can build credit fast and boost your credit scores 25 or more points!
Another option to offset your debt to credit limit ratios and boost your scores is by adding new credit lines with large limits and no balances. If you're interested in adding a $5,000 to $10,000 tradeline on all three personal credit bureaus guaranteed then CLICK HERE.
Remember - Life is ten percent what happens to you and ninety percent how you respond to it. ~ Lou Holtz
To Your Success!
Marco Carbajo
About the Author
Marco Carbajo is a business credit specialist, author, speaker, and founder of the National Entrepreneur Club. Are you interested in separating your personal credit from business credit? Join our business credit community and start building business credit today and Click Here.
Despite the massive efforts of the credit reporting agencies to convince you otherwise, there are many credit repair companies that are no different than most other services. Like all industries, less-than-honest companies do exist and are damaging to their clients and to the credit repair industry as a whole.
For example, you may have 20 car mechanics in your hometown. Most likely, 17-18 of these mechanics are honest, hardworking people who want to earn a living and give you the best service possible. The other 2 or 3 mechanics may not be so honest and will take your money while not giving you the quality or quantity of service you pay for... or, they may be out-and-out crooks who take your money and lie to you.
This doesn't mean that your town is a bad place to get your car fixed; it just means that, like any industry anywhere, there are good companies, mediocre companies, and really bad companies.
As for credit repair- do your homework. Is the company you are selecting a non-profit organization or credit union service organization? Are they claiming that they can delete accurate negative information? Do they provide you with consumer rights information? Do they charge outrageous fees?
Consumers should take these things into consideration when hiring a credit repair company to help them with their credit issues.
To better understand the credit repair business some background on the industry is necessary. Beginning in the mid to late 1970s, many unscrupulous entrepreneurs realized that millions of Americans have damaged credit report ratings and that they could make money by convincing these people they could remove all negative information from their credit files.
Because the industry was completely unregulated, hundreds of credit repair companies sprung up all over the place. Most of them were dishonest and were interested only in stealing money from gullible consumers. As a consequence, thousands of consumers were milked out of millions of dollars while receiving little, if any, of what was promised to them.
Federal and state authorities received numerous complaints about credit repair companies, and as a result, both federal and state governments began passing laws regulating the credit repair industry. In addition, credit repair companies must contract with all clients in writing before work begins and cannot collect any upfront fees unless they exempt from CROA.
Be sure to read ‘Credit Repair Fix' for more details regarding laws governing credit repair companies or watch my compliance video below.
Despite such regulation, dishonest credit repair companies still operate. This bit of knowledge is used by dishonest credit repair services to perform credit repair for their clients. Their aim is to either overwhelm the Big Three with reverification requests (letter writing) with the goal of getting as much negative information removed as they possibly can, or hoping that a few requests slip through and result in the removal of negative information.
It is important to note that not all credit repair companies are dishonest. Some companies offer a valuable service to those who find the whole process of credit repair too boring or complex, or just don't have the time to learn about credit repair. A Credit Repair Service is as legitimate and worthwhile as a tax preparation service - the IRS claims that everyone can do their own taxes, but most people hire someone else to do them.
There are a number of credit repair companies offering to give consumers a "fresh start" with their credit histories. These companies seek to obtain a second Social Security number or federal ID number for their clients. This is commonly referred to as "file segregation". File segregation is a fraudulent practice and violates many Federal and State Laws.
I strongly oppose the abuse of consumers by companies and individuals which direct you to commit fraud in order to obtain "clean" credit reports. In this scheme, you are promised a chance to hide unfavorable credit information by establishing a new credit identity. That may sound perfect, especially if you're afraid that you won't get any credit as long as bankruptcy appears on your credit record. The problem: "File segregation" is illegal. If you use it, you could face fines or even a prison sentence.
If you have filed for bankruptcy, you may receive a letter from a credit repair company that warns you about your inability to get credit cards, personal loans, or any other types of credit for 10 years. For a fee, the company promises to help you hide your bankruptcy and establish a new credit identity to use when you apply for credit. These companies also make pitches in classified ads, on radio and TV, and even over the Internet.
If you pay the fee and sign up for the service, you may be directed to apply for an Employer Identification Number (EIN) from the Internal Revenue Service (IRS). Typically, EINs - which resemble Social Security numbers - are used by businesses to report financial information to the IRS and the Social Security Administration. After you receive your EIN, the credit repair service will tell you to use it in place of your Social Security number when you apply for credit. They'll also tell you to use a new mailing address and some credit references.
To convince you to establish a new credit identity, the credit repair service is likely to make a variety of false claims. Listen carefully; these false claims, along with the pitch for getting a new credit identity, should alert you to the possibility of fraud. You'll probably hear:
Claim 1: You will not be able to get credit for 10 years (the period of time bankruptcy information may stay on your credit record).
Each creditor has its own criteria for granting credit. While one may reject your application because of a bankruptcy, another may grant you credit shortly after you filed for bankruptcy. And, given a new reliable payment record, your chances of getting credit will probably increase as time passes.
Claim 2: The company or "file segregation" program is affiliated with the federal government.
The federal government does not support or work with companies that offer such programs.
Claim 3: The "file segregation" program is legal.
It is a federal crime to make any false statements on a loan or credit application. The credit repair company may advise you to do just that. It is a federal crime to misrepresent your Social Security number. It also is a federal crime to obtain an EIN from the IRS under false pretenses.
Further, you could be charged with mail or wire fraud if you use the mail or the telephone to apply for credit and provide false information. Worse yet, file segregation likely would constitute civil fraud under many state laws.
All the information in this post is provided to help clear up those "questionable" items on your credit reports. "Credit repair" is a general term usually used to describe a systematic process of rehabilitating an individual's creditworthiness, or financial credit reputation.
The process is generally started by obtaining copies of the individual's credit report, reviewing the credit report for errors, omissions, and misleading information, and requesting corrections to such information by means of a formal dispute letter. Many laws, regulations, and practices govern this process, and many organizations exist that will assist in guiding individuals through this sometimes complex process, though much, if not all, may be accomplished by individuals by their own efforts.
When you identify inaccurate, erroneous, and obsolete entries on your credit reports and bring it to the credit reporting agency's attention they must do one of two things by law. Correct it or delete it!
If you are in the process of applying for a mortgage, immediately notify your lender of any incorrect information in your report and you may be able to do a rapid rescore.
Remember - The direction in which education starts a man will determine his future life. ~ Plato
Click Here for a reputable credit repair service that I have been personally using for my clients for over 18 years.
P.S. Do you have any credit repair scams or stories that you would like to share?
To Your Success!
Marco Carbajo
About the Author
Marco Carbajo is a business credit specialist, author, speaker, and founder of the National Entrepreneur Club. Click here to visit his blog and signup free to get strategies, resources, and credit building tips with blog updates, news, and more! To start building business credit join his business credit community today and Click Here.
One of the mistakes that I see business owners make when attempting to build business credit is not paying attention to details. I want to provide you a business credit tip that can help improve your chances of getting approved for loans, credit cards, and lines of credit for your business.
One small detail like choosing an SIC code in a high risk classification can mean your business being flagged as a high risk with the business credit bureaus. As a result every lender, creditor, or company that pulls your business credit report will see that you're business is in a high risk classification.
As a result many lenders will automatically decline your application! In addition, Dun & Bradstreet will minimize the credit limit recommendation for your company on your DNB file which lenders take a close look at prior to extending credit to your business.
This short video will give you these high risk categories to stay away from so you can prevent your business from being placed in a high risk classification. If you haven't selected an SIC code or NAICS code for your entity you will need to prior to setting up your Dun & Bradstreet file.
Don't let a simple detail like this hurt your chances for obtaining the cash credit and financing your business needs and deserves.
Every business will at one point require an influx of cash in order to cover operating expenses, expansion costs, legal fees, inventory or a range of other items it may require in order to operate.
Another major benefit for building business credit is you're ability to have access to capital which provides the leverage you need to purchase additional income producing assets like other businesses, real estate, equipment and so on.
The worst mistake you can make is seeking funding when your business needs it most. Lenders extend cash credit lines to businesses that are not in high risk industries, don't need the capital and have strong business credit ratings. Start digging your well before your business gets thirsty!
CLICK HERE to join my business credit community and start building your business credit rating today!
Remember - The direction in which education starts a man will determine his future life. ~ Plato
To Your Success!
Marco Carbajo
About the Author
Marco Carbajo is a business credit specialist, author, speaker, and founder of the National Entrepreneur Club. Click here to visit his blog and signup free to get strategies, resources, and credit building tips with blog updates, news, and more! To start building business credit join his business credit community today and Click Here.
There's been quite a stir on the integration of FICO® 08 which is the credit scoring system used by the majority of lenders to determine a consumer's credit worthiness. Similar to your personal credit ratings, businesses and corporations also have a credit rating system that potential lenders use to determine its credit worthiness.
Unlike a personal credit rating, there is no designated standard for determining the credit worthiness of businesses. However, the main tool used to determine and establish business credit ratings is D&B's PAYDEX system.
Where a personal FICO® score is based only on credit history that includes information on how much a person borrows and how well they repay loans, a credit rating for a business takes into consideration company size as determined by assets and number of employees.
Where a personal credit rating is based on financial information provided by credit card companies, retail establishments, and financial institutions, a business credit report and rating is determined by information supplied by the business owner and gathered from vendors, suppliers, and other trade accounts.
For this reason, potential lenders may be different from one another in their evaluation of a business' credit history by emphasizing certain qualifications more than others.
Like most industries, there is a specialized language involved with business credit reports and ratings.
The following is a list of some of the most common concepts and terms as well as their definitions:
Average High Credit / Highest Credit
In order to put a business's credit in perspective, these are based on the total amount of credit owed as compared to the industry as a whole.
Business in Good Standing
Includes any problems with the business overall.
Commercial Credit Score
A D&B prediction regarding the chances of an account becoming severely delinquent within one year.
Comprehensive Report
This is a combination of several D&B business credit reports that paints a more complete picture of the company's credit history. It includes the results of the PAYDEX analysis, a company's credit score and Financial Stress class, as well as any public filings or liens, the business's history and operations (including when it filed for incorporation, annual financial statements, facilities, affiliations, and number of employees).
Credit Score Class
This is part of the D&B assessment that gauges payment habits to determine how likely it is that a potential account will be delinquent in the next 12 months. The scoring can range from 1 to 5 with 1 being the score assigned for the lowest risk and 5 for the highest.
Financial Stress Score
This is part of the D&B assessment that analyzes the Financial Stress that a business is experiencing in order to predict how likely it is that a business will fail in the next 12 months.
PAYDEX
This is D&B's primary assessment that analyzes how likely it is that a company will make its future payments on time. An 80 paydex score for a business can be compared to having a 720 personal credit score.
Every business will at one point require an influx of cash in order to cover operating expenses, expansion costs, legal fees, inventory or a range of other items the business may require in order to operate. The worst mistake you can make is seeking funding when your business needs it most. Lenders extend cash credit lines to businesses that don't need the capital and have strong business credit ratings. Start digging your well before your business gets thirsty!
CLICK HERE to join my business credit community and start building your business credit rating today!
Remember - The direction in which education starts a man will determine his future life. ~ Plato
To Your Success!
Marco Carbajo
About the Author
Marco Carbajo is a business credit specialist, author, speaker, and founder of the National Entrepreneur Club. Click here to visit his blog and signup free to get strategies, resources, and credit building tips with blog updates, news, and more! To start building business credit join his business credit community today and Click Here.
During tough economic times many business owners are faced dealing with tough personal credit challenges. As a result they have to resort to applying for bad credit business loans just to keep their businesses afloat regardless of the interest rate being charged.
Hard money lenders have no problem charging outrageous fees and interest rates for taking on the risk but there are alternatives to bad credit business loans.
Here are my Top 5 Solutions to Bad Credit Business Loans
Factoring is a form of finance used to finance commercial, consumer, and government accounts receivable. Typically, businesses factor their accounts receivable to improve and accelerate their cash flow. Businesses that factor their invoices (accounts receivable) sell their invoices to a factoring company, usually for anywhere between 95 to 99 cents on the dollar.
An alternative to a traditional bad credit business loan, you can receive advance cash based off your future credit card sales (Visa, MasterCard, American Express, Discover, and Debit Cards). There are no personal guarantees or collateral attached to the business advance. This allows you to have the working capital you need within 3 business days or less. There are no restrictions on how to use the money allowing you to grow your business hassle free.
While liquidation usually means you're closing your business forever this can be a viable strategy to raise capital without actually closing your business. You may have equipment that you no longer use or other assets that can be sold off that can generate substantial capital for your business.
It's not a shame to have bad credit because everyone at one time goes through challenges but it is a shame to keep it. Start repairing your bad credit immediately by either fixing it yourself or enrolling in a solid, reputable, and legal credit repair service.
In addition to credit restoration another strategy for solving a bad credit challenge is in improving your debt to credit utilization. You accomplish this by establishing higher credit limits with lower balances typically below 30%. When you have larger credit limits on personal and business credit reports new lenders that you apply to will tend to extend even larger credit lines.
Bad credit business loans do exist but before you decide to commit be sure to consider these options. If you do choose to apply or you are already in a high interest rate loan because of bad credit be sure to start restoring your personal credit. Once you improve your credit you can apply for a loan and obtain a much better rate. This will allow you to pay off the high interest rate loan and saving you thousands in interest.
Remember - Improve your business, your life, your relationships, your finances and your health. When you do the whole world improves. ~ Mark Victor Hansen
Instead of jeopardizing your personal credit and assets every time your company requires financing, you can use the business' credit rating to secure the financing you need with even more favorable terms and lower interest rates.
Marco Carbajo is a business credit specialist, author, speaker, and founder of the National Entrepreneur Club. Click here to visit his blog and signup free to get strategies, resources, and credit building tips with blog updates, news, and more! To start building business credit join his business credit community today and Click Here.
Entrepreneurs and small business owners who have a separate legal entity for their business have a unique opportunity that no other individual or sole proprietor has.
It's the opportunity to start business credit by establishing a business credit profile that is completely separate from a personal credit profile.
The main problem still facing today's small business owner is fewer than 10 percent know about or truly understand how business credit is established and tracked-and how it affects their lives and businesses.
Statistics even show that over 65% off all small businesses use credit cards on a regular basis; but the problem is less than half of those credit cards are actually in the business name. The others continue to use the owner's personal credit cards for business transactions.
Here's what others are saying about the importance of starting business credit:
One of the key advantages of having business credit is instead of putting your personal credit and assets at risk every time your company requires financing you would now be in a position to secure the financing you need with your businesses' credit.
Here is the ‘Top 10 Reasons Why You Should Start Business Credit Now.'
Any debt you accumulate for the business would only report to your business credit file not your personal credit file.
Eliminate the co-mingling of funds-and this includes the "co-mingling" of credit profiles so you won't jeopardize the protection of the corporate veil.
Protect you and your family from personal liability when you get approved solely on your businesses' credit file.
Improve your personal debt to credit limit ratios by transferring the balances of business debt used with your personal credit to your business credit.
Eliminate personal liability you have on your existing business debt by balance transfer from personal credit to your business credit.
Increase your personal credit limit availability for you and your family.
Improve the appearance of your businesses' funding capacity and stability.
Eliminate inquiries on personal credit when applying for business financing.
Increase your businesses' ability to obtain cash credit 10 to 100 times greater then you can obtain personally.
Last but not least you SAVE MONEY! For example, an individual might pay up to 13% interest on a $100,000 line of credit whereas a business could qualify for an interest rate of 7%. That would save you almost $40,000 in interest alone.
Some other benefits include:
Business credit cards have much higher limits than personal credit cards.
Having the larger cash lines available for unforeseen expenses like expansion, equipment, operations or fulfillment
Prevent the limits that lenders will impose on you for personal credit for you and your family's needs
Reduce your tax burden and improve accounting
Still not convinced you need to start business credit?
CLICK HERE to listen to a free Business Credit Seminar ($597 Value)
Every business will at one point require an influx of cash in order to cover operating expenses, expansion costs, legal fees, inventory or a range of other items the business may require in order to operate. The worst mistake you can make is seeking funding when your business needs it most. Lenders extend cash credit lines to businesses that don't need the capital. Start digging your well before your business gets thirsty!
If you ask any business owner how they financed their business start up the answers usually are:
Personal credit cards
Tapped into home equity line
Personal loan from the bank
Personal loan from family & friends
Private investors
One of the many risks that business owners face is using their personal assets as collateral or guarantee for business loans and financing. If the business owner defaults on a loan then, valuable items like a car, house, or bank account can be vulnerable to creditors' claims.
Instead of jeopardizing your personal credit and assets every time your company requires financing, you can use the business' credit rating to secure the financing you need with even more favorable terms and lower interest rates.
Marco Carbajo is a business credit specialist, author, speaker, and founder of the National Entrepreneur Club. Click here to visit his blog and signup free to get strategies, resources, and credit building tips with blog updates, news, and more! To start building business credit join his business credit community today and Click Here.
Once you have an entity structure and obtained a Dun & Bradstreet number now it's time to start building your business credit profile. One of the biggest mistakes made by entrepreneurs attempting to build instant business credit is applying for numerous vendor accounts.
While some may have a tendency to believe that the more the merrier is a sound strategy I tend to disagree. The reason is simply getting approved for vendor credit is one thing but what really matters is whether or not the vendor reports your payment history to the business credit bureaus.
There are over 500,000 vendors extending credit to businesses, but less than 6,000 of them report to the business credit bureaus! So for real instant business credit that will build your business credit you have to make sure you choose the right vendors to apply with.
Secondly, there are vendors who do report your payment history but only on a quarterly or even yearly basis. Time is of the essence and for instant business credit you also have to make sure the vendor you apply with also reports to the business credit bureaus on a monthly basis!
Here are some examples of instant business credit resources:
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 411 directory and have a working website. New businesses can start out with smaller limits that will increase when you pay on time every month.
N.E.C. is a membership community for entrepreneurs providing business credit training, tools, resources, videos, audios, news, and much more. N.E.C. has a wide range of discounted top name services.
N.E.C. offers a monthly membership account and reports to Dun and Bradstreet. Best of all they report your payment history every 30 days. New members can start out at the Silver level or choose to increase their level depending on what stage of the business credit building process they are at.
Capital One by far provides the fastest response for business credit approval. (60 seconds) This card is perfect for new or established business owners who want to build business credit history.
Capital One Small Business offers a 0% introductory APR on purchases until 2010 as well as balance transfers. There's no annual fee and credit line approvals can be up to $10k.
While you can obtain instant business credit for your business the process of building a business credit profile and score does take some time. As long as you keep your credit lines active and maintain a solid payment history with minimal balances (less than 30%) you can expect to see your credit lines increase over time.
New credit line approvals for your business will also be larger due to favorable business credit scores and existing credit line capacity.
For a complete list of approved vendors, business credit cards, and banks join my business credit community today!
Remember ~ Create a definite plan for carrying out your desire and begin at once, whether you ready or not, to put this plan into action. Napoleon Hill
To Your Success!
Marco Carbajo
About the Author
Marco Carbajo is a business credit specialist, author, speaker, and founder of the National Entrepreneur Club. Click here to visit his blog and signup free to get strategies, resources, and credit building tips with blog updates, news, and more! To start building business credit join his business credit community today and Click Here.
I felt it was extremely important to write about this because of the many people who may have seen their good credit fall to the wayside as a result of a recent job loss, cut back, family emergency or many other unforeseen circumstances who are desperately seeking for help with their personal credit.
All across the country I have heard stories like Joanna Fridinger, owner of a limo company in Baltimore, who had the credit limit on her American Express card cut to $1,400 from $19,500 after getting just a single late fee on another credit card.
With all this circulating the media it's easy for some people to be influenced to believe that there is no hope and no way to get back on track.
In my opinion that's a bunch of hogwash and stinking thinking that does nothing but perpetuate negative results.
There is no challenge that you can't overcome!
When it comes to personal credit challenges there are several alternative solutions that each and every individual should consider.
In this particular post I am going to cover one of the many viable solutions for individuals undergoing personal credit challenges.
First, let me say that this is my personal opinion and after working with thousands of consumers on personal credit issues over 18 years one of the most commonly asked questions I hear is ‘ How can I get my personal credit restored?'
Before I get into this highly misunderstood service called ‘credit restoration' or ‘credit repair' let me be the first to tell you that if you are an entrepreneur or small business owner that has experienced personal credit issues don't be alarmed when it comes to obtaining business financing.
One of the major benefits for entrepreneurs and small business owners is the ability to build a business credit profile separate from your personal credit profile.
This post is intended to fully educate you on answering two main questions:
Is Personal Credit Restoration Legal?
Are Credit Restoration Companies Legal?
Let's get started shall we?
Personal credit restoration
The Federal Trade Commission which is a federal agency created to investigate and eliminate unfair and deceptive trade practices in business, initiated a specific body of legislation which was put in place to regulate the credit reporting agencies and protect YOU the consumer from unfair credit reporting. This legislation is called the Fair Credit Reporting Act.
Now look at section 611 of the FCRA which outlines the procedures in case of disputed accuracy on your credit reports. The FCRA empowers YOU the consumer the right to dispute and verify the accuracy of questionable items on your personal credit reports.
So, this means you can in fact repair your own credit in accordance with the Fair Credit Reporting Act.
But here' the catch!
The underlying problem for the consumer is that this is a self policing law. It's completely up to you the consumer to police your own personal credit reports. It's up to you to find any errors and it's up to you to monitor any and all activity on your personal credit files with all three main credit reporting agencies.
In the justice system you are innocent until proven guilty but in the credit reporting system you are guilty until you proof yourself innocent.
If you haven't seen your personal credit reports recently keep in mind that you are entitled to one free credit report per year which can be accessed at http://www.annualcreditreport.com
Now don't worry this won't count as an inquiry when you order your free annual reports.
Credit Restoration Companies
Despite the massive efforts of the credit reporting agencies (which are privately held companies) to convince you otherwise, there are many credit restoration companies that are no different than most other services. Like all industries, less-than-honest companies do exist and are damaging to their clients and to the credit restoration industry as a whole.
For example, you may have 20 car mechanics in your hometown. Most likely, 17-18 of these mechanics are honest, hardworking people who want to earn a living and give you the best service possible. The other 2 or 3 mechanics may not be so honest and will take your money while not giving you the quality or quantity of service you pay for... or, they may be out-and-out crooks who take your money and lie to you.
This doesn't mean that your town is a bad place to get your car fixed; it just means that, like any industry anywhere, there are good companies, mediocre companies, and really bad companies.
Let me take you back a little bit first because the credit restoration industry was completely unregulated in the mid to late 1970s, hundreds of credit restoration companies sprung up all over the place. Most of them were dishonest and were interested only in stealing money from gullible consumers. As a consequence, thousands of consumers were milked out of millions of dollars while receiving little, if any, of what was promised to them.
As a result the FTC initiated another legislation called the Credit Repair Organizations Act (CROA) that outlines how these companies may legally operate.
This Federal regulation is proof that the industry as a whole is legal and not a scam. I think the reason why there has been this general negativity about credit restoration companies is because of the few bad companies that have given the industry as a whole a bad name.
The Federal Trade Commission regulates credit bureaus and credit repair organizations.
Take a look at the definition of a Credit Repair Organization (look at Sec. 403 Definitions)
(3) Credit repair organization. - The term ‘credit repair organization'-
(A) means any person who uses any instrumentality of interstate commerce or the mails to sell, provide, or perform any service, in return for the payment of money or other valuable consideration, for the express or implied purpose of
(i) improving any consumer's credit record, credit history, or credit rating; or
(ii) providing advice or assistance to any consumer with regard to any activity or service described in clause (i); and
Now let's look at Section 404 Prohibited Practices.
Specifically look at definition (b) payment in advance.
(b) Payment in Advance-No credit repair organization may charge or receive any money or other valuable consideration for the performance of any service which the credit repair organization has agreed to perform for any consumer before such service is fully performed.
Basically, a credit restoration company cannot charge you for credit restoration upfront! So if you decide to hire a credit restoration company don't pay for the fees up front.
But, there are specific organizations and institutions that DO NOT fall under the definition of a credit restoration organization and are therefore exempt from prohibited practices.
This means that there are a very select few credit restoration companies out there that can charge for credit restoration upfront.
Take a look at Sec 403 definitions under description (B) does not include-
These organizations and institutions include any nonprofit organization which is exempt from taxation under section 501(c) of the internal revenue code and any depository institution (as that term is defined in section 3 of the Federal Deposit Insurance Act) or any Federal or State credit union (as those terms are defined in section 101 of the Federal Credit Union Act), or any affiliate or subsidiary of such a depository institution or credit union.
So if you decide to enroll in a credit restoration service do not pay for the service upfront unless the company you decide to hire falls under Sec 403.
If you decide to promote a credit restoration service to your clients be sure to ask the right questions which you now know.
Remember - Improve your business, your life, your relationships, your finances and your health. When you do the whole world improves. ~ Mark Victor Hansen
To Your Success!
Marco Carbajo
About the Author
Marco Carbajo is a business credit specialist, author, speaker, and founder of the National Entrepreneur Club. Click here to visit his blog and signup free to get strategies, resources, and credit building tips with blog updates, news, and more! To start building business credit join his business credit community today and Click Here.
This blog shares information, news, tips, training, and resources for entrepreneurs and small business owners on building business credit and obtaining cash credit, financing, and bank lines of credit.
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