Corporate Credit Obtaining Guarantee
Caveat! You’ve probably heard many different companies make claims about how they can ensure your business or corporation gets credit. They may say things like, “With our credit building program, we guarantee you’ll get up to $20,000 or $50,000” and so on.
The key word is “until” because they really don’t know if they will get the full amount of financing needed for their business. What they know you are not is the lending criteria of common commercial creditors. They know the most likely creditors who will say yes based on your business credit profile and personal credit scores.
These can be valuable services, as they can help decrease the time it takes to finance your business and help you find creditors who are most likely to approve your credit application. What is missing from the sales copy, however, is the fact that most credit building is based on credit from retail vendors, such as local office supply stores or home supply stores. home, to create a Dun & Bradstreet credit profile.
To get “real money” lines of credit, you’ll need a good personal credit score of at least 620, but preferably 680 or better. Don’t worry, bad credit doesn’t stop you from building credit on your business, the process can take longer.
Secured credit card or lines of credit
These services may even offer a credit card just for being their customer, but it’s usually just credit for their services and/or products. There have even been companies that offer programs where they claim you can receive up to $100,000.00 in cash credit for a $5,000 fee. Sound too easy? Keep in mind that if it were that easy, most small businesses would have an easy time getting the financing they need.
If you personally have $5,000 that you can use to build corporate credit, you’d be better off going to a bank like Wells Fargo and getting a secured business credit card that can go unsecured with a good payment history. Just remember “Buyer Beware”. If it sounds too good to be true, it probably is.
Purchase of old companies / Aging of your business
There is a popular belief that you can quickly get a large amount of credit by buying a Shelf-Corporation. Well, in some cases you can. After all, most business credit applications will ask for a personal guarantee if the business is less than 2 years old. To do this, you really have to research so-called shelf corporations.
The first thing to investigate is whether or not a negative history is attached to the company and whether or not the tax identification number is as old as the company. It is also important to ensure that all the companies documentation is up to date and the company must have a bank account that is no less than 6 months older than the company, unless the company has been in business for a long time and the bank account is between 1 and 2 years old. Basically, this needs to be a real company that has been doing real business, not just documents that someone filed hoping to sell it as an old corporation at a later date.
Do your homework, because there are plenty of companies that say they have aging corporations or dormant corporations that they can sell to you. Always ask lots of questions and make sure the corporation you are buying is a real business. Not just documents filed with the state.
last word
The business credit industry isn’t regulated by the government in the same way that personal credit is, so you’ll need to do your homework when you talk to a credit-building service and ask a lot of questions.
Just because a company has been in business for a long time does not mean that they are not overcharging for their services or that you are receiving the type of service that is advertised. If the program sounds too easy or too good to be true, chances are you’re wasting your money. Keep this in mind. It takes years to establish a good business credit history, not months.