The Business Credit

Business credit is necessary to purchase office supplies, equipment, computers, and other reasonable office needs. Credit can be applied for auto loans, truck loans or any type of leases. Literally, with no credit there is no business except if your assets, or those of your partners, allow you to have at your disposal large amounts of money to develop a business plan.

In commercial trade, business credit refers to the granting of money, usually a loan and the creation of debt serving to create a capital of work or financial capital dependent on credit, obtaining in return credit worthiness necessary to succeed in any enterprise. Establish credit intended for your business activities is a similar process as applying for personal credit.

Credit scores vary between personal credit and business credit. Business credit scores range on a scale from 0 to 100, while personal credit scores range from 300 to 850. In business, scores of 75 and up are considered excellent ratings, while in personal matters it is necessary to show at least a score of 680 for credit worthiness.

To establish an independent business credit profile and credit score, financial advisers recommend doing research to find the companies that offer credit to start a business but that actually do not use your personal credit information. Instead, they report your payment experiences to the businesses credit bureaus; hence, your business credit profile is established this way.

Independently of any advice, almost every single business may need some type of credit eventually. Although business owners can obtain it using their personal credit history, guarantees, or collateral, the best terms and interest rates are granted to those businesses with a business credit profile already established.

By following a few simple steps, business credit profiles can be established whether for small business or a brand new large corporation. Start by forming a corporation or LLC to operate your business and obtain an Employer Identification Number (EIN) from the IRS.

Structuring your business as a corporation instead of a sole partnership or proprietorship prevents the disclosure of personal credit information, cross linking your personal finances with your business debt, and putting at risk your assets in the event of litigation. Although you cannot create a second credit personal identity, you are able to apply for credit under a business name.

Once formed, register your company with the business credit bureaus, and make sure to comply with the business credit market requirements of the credit market before applying for a loan, mortgage, or credit. You must also be aware that many financial institutions will ask you for financial statements and a professionally written business plan.

Remember that banks and other financial institutions may check your personal credit history in order to approve a business credit, so do not forget to find the companies granting credit to businesses without personal credit check, guarantee or collateral.

Once your application for business credit is approved, responsible management of your debt will prevent falling into missing payments or making your payments late, situations that will negatively affect your credit score. In addition, the timely pay off debt will keep the business credit profile active, creating a good credit history, which is useful in long-term plans.