These are a few secrets to:
Obtain Business Credit that Sales People will NEVER Reveal
Even if you hire a company to assist you in building business credit you will need to find an assistant, or yourself, who is very organized and will need to put in 15-20 hours of work for the first six months/every six months as you continue to expand your business borrowing leverage.
If you have a brand new corporation then you are at a disadvantage from the get-go, but you can also use good personal credit to more quickly advance along the way – but it is not required.
New businesses (S-Corp, C-Corp, or LLC) will need a bank account attached to this corporate name, purchasing an old shell corporation from someone else with consistent corporate filings (by itself) is useless. People believe that having an old corporation makes them look more established and will enable them to get better loans – this is not true! If there has been an attached bank account for this corporation that has respectable dollar amounts of money flowing in and out each month, then you have something of value (I’m sure you’re getting my point).
The person that you have doing the work to assist you in working with the business credit building/funding company. You or an assistant must be very organized and calendar and execute the instruction given to them. For example: if a person has really bad personal credit and no business credit, the instructions would be to go get three small business credit cards (ones that virtually approve everyone and don’t even require a social security number, just an EIN) and they are typically small credit limits from places along the lines of City Shell Oil Card, a Sears Department Store Business Card, a Radio Shack Card, etc… which will all typically start you off at about a $300 credit limit. The instructions from a good company will mostly tell you to apply for the card, call and activate the card, run up the full amount to the credit limit and pay it off each month, for the first two months. After the second month you contact them and apply for a credit increase.
*You ask for the increase at this point because if you do it before the end of two months, they typically won’t approve you, if you make this request when you still have a high balance – then they usually think that you are desperate for money and will not approve you. Lastly, if you have run up the credit card to the full limit each month, they will say that you don’t need the limit increase and they will deny you for that reason. You can see just from the above example how important it is to have somebody calendar instructions and follow them to a “T”.
Additionally if someone pays off a loan in less than two months there is a reasonable chance that Intellius and or Dunn & Bradstreet will not factor these payments into your business credit score and thus serve you no benefit/purpose.
Please keep in mind that there are many steps to leverage your business credit and there are specialty banks that will make dramatic increases in your credit limit availability after you pay off short term loans. These banks have the deserved belief that their best customers for the future; are actually the ones that have already borrowed money and paid them off without a problem. These loan interest rates are a little bit higher but the more money you pay off, the better leverage you have to get a lower interest rate on your next loan because you are considered a lower risk each time.
If you want to learn more about these techniques or it is important for you to establish strong business lines of credit – you can surf the net, talk to different company’s sales people, google and search for what they tell you is true or false. Or, you can call us and let us handle everything for you in an exceptional format so that you can concentrate on building your business.