Start A Business With Lousy Credit

You may be trying to start a business, or have one thats in its initial stages. Your idea is great, your plan is flawless, and your product or service is ready for the fast lane. Only problem is, that super-charged, cant-miss-small-business of yours is sitting by the side of the road. Its stuck, and its out of gas.

The analogy may not be great, but if youre in that type of situation, you know what its all about. Your personal credit rating is less than stellar. You found out just how bad, when the banks Business Loan Officer gave you a look of horror when you told him what you wanted to borrow, and why.

Lets face it, he probably couldnt wait to get you out of his office fast enough. Is there anything you can do to jump-start this situation? Yes there is. In fact, there a number of avenues you need to explore.

First things first. There are three credit reporting agencies, Equifax, Experian and TransUnion. You want to get your tri-merge credit report, which is a report from all 3 credit bureaus. Once you get them in hand, youll have a clear idea of exactly where you stand and just as importantly, why.

Review each and every report. Look for errors, because (guess what), the credit bureaus do make them. Maybe a bill theyre reporting as unpaid, involved a dispute. Maybe a credit card purchase wasnt yours. If you find any glitches, report them immediately to the credit bureau involved. You can also enlist the services of an established credit repair company, if youre not sure how to handle the disputes yourself.

Creating a business credit profile can also be an answer to your credit issue. By creating a business credit profile, you can start establishing credit for your business, which is separate than your personal FICO score. Establishing a business credit profile can help you get your business started while working to improve your personal FICO score. Once you establish your business credit profile your business can start applying for business credit cards and other types of business financing.

But, when you get business credit cards, keep your personal and business credit separate very separate. Many folks fall prey to the temptation of using business credit cards for personal expenses. This is more than a red flag to business lenders, its a giant red balloon. Commingling your funds can cause many problems for your accountant and attorney. When you commingle your personal and business funds, you open the door to lawsuits and your bookkeeping becomes a nightmare.

Business credit cards can be a great source of financing. One misconception is that business credit cards have a high interest rate. This just isnt true. Many business credit cards fall in the interest rate range of 8-14%. But more importantly remember this; its not always the cost of money thats important, but the availability of money. Wouldnt you like to have an extra $30,000, $50,000, or even $100,000 right now to start or expand your business? Make sure you are diligent about making payments on time and, two things will happen: First, the credit card company will court your business, and probably offer you a credit line increase. Second, your credit standing will improve with the bank. Banks love it when youve demonstrated the ability to pay off a loan even if its not theirs.

Finally, make certain that you use your credit wisely, and strictly for the business. And more importantly, to improve the business new equipment or hiring employees, marketing, whatever it takes. This will show a Loan Officer that youre serious about what youre doing, and will make you a more attractive loan candidate.

Article Source: http://worldofcompendium.com

About the Author (text)

Please Rate this Article

5 out of 54 out of 53 out of 52 out of 51 out of 5 

Not yet Rated