The Importance Of Business Credit...
In today's world you simply can't ignore the fact that we live in Credit Driven society. Plutus Financial Solutions
After reading this you should have a better understanding of what Business Credit is and why you must use it to your advantage. I'm going to begin with the differences and similarities between Business Credit and Personal Credit. Then I will finish up with how to use it to your advantage.
Personal Credit: Personal Credit is the profile attached to your Name, Address (Past & Present), Employment, Date of Brith, & SSN. Think of this profile as your autobiography. It is your payment history out there for all to see how responsible you are in honoring your commitments to repay others that previously trusted you enough to extended you some form of credit. This is all rated with scoring models provided from the 3 major credit reporting bureaus Experian, Transunion, & Equifax. Their scoring models range from 0 - 850 with 850 being the best. They rely on algorithms which determine your credit worthiness based on numerous variables including:
- How many open & closed accounts in good standing
- How many Negative accounts (Late Payments, Charge-Offs, Collections, Bankruptcies, Foreclosures, Repossessions, Tax Liens or Judgements)
- Debt to Credit Ratios (% of debt out of the total credit limit you have) example: You have a $10,000 Credit Card and you have spent $2,000 this means your Debt to Credit Ratio is 20%. It's very good when you never go over 25-30%. Anything over that is actually working against you and bringing your score down significantly.
- Debt to Income Ratios (How much do you owe into how much money you earn)
- Your current Zip Code (Yes they judge you by where you live)
Based on the above information a score is generated typically between 400 - 750. Once you have Negative accounts reporting on your Personal Credit Profile they stay there for about 7 years. This why it's very important to pay your bills on time and never bite off more than you can chew when it comes to your Personal Credit.
Business Credit: Business Credit is a profile that's attached to you Business' Name, Address (Past & Present), Date of Formation or Incorporation (Business Date of Birth) & Tax ID Number AKA- EIN (Business SSN). As you can see a business is almost the same as a real person in the eyes of the Credit Bureaus. However, there are a few differences such as the 3 major Business Credit Bureaus are Experian Business, Dunn & Bradstreet (D&B), & Equifax Small Business. You see there are completely different Credit Bureaus when it comes to Business Credit Profiles. Their scoring models are slightly different Business Credit Scores range from 0 - 100 with 100 being the highest. When done correctly your Business Credit Score should be between 80 - 95 which is excellent. The scoring variables are the same for both Personal & Business so I will not repeat them here. Unfortunately, when it comes to Business Credit the large majority of Businesses in the USA & Canada do not report their Payment Experiences to the Business Credit Bureaus. The reason is simple, it is an extra thing to do for small business owners that already don't have the extra time and money to spend on purchasing the software needed to upload data to the Credit Bureaus and they don't want to take the time formatting their accounts and making sure it is uploaded on time every month. This requires either the owner or one of their employees to dedicate time, energy, and resources to this. I'm sure you get the picture by now it's just simply to much work for people to do with no substantial benefit to them. On top of that you have to have a certain number of accounts to even qualify to report your data. Even though you have been paying Joe Smith your local supplier on time for 10 years for the line of credit he extends to your business, in the eyes of the Credit Bureaus and the Banks that history never actually happened. It's a complete mess and it will not be fixed anytime in the near future. This is why many people think they have great business credit but don't understand why the bank and other lenders still require their Personal Guarantee using their SSN. The great thing is that your company is not you and if the Business were to have some problems and Negative accounts appeared they would only affect that business not the business owner or any other businesses the owner is apart of. You can have over 500 Businesses if you want and each one is considered separate from the next, this is the beauty of Corporate America its as if you can actually be over 500 different people and it will never affect your Personal Credit Profile if done properly. Look at it like this you have an unlimited amount of pages in a book to keep trying to paint the perfect picture. Whereas with your Personal you only have 1 page so you better no make any mistakes. I hope this was able to turn on the lights for you.
How To Take Advantage Of This Flaw In Humanity
I'm going to give an example I use with my clients, regardless of the industry they are in. Pretend you own a small construction company and you do residential work painting, floors, kitchens, bathrooms ect. Your company Revenue is $400K per year and your doing the best you can with 2 used vans, average Personal Credit, & some Residential Tools. And everything has your Personal Guarantee attached. You would love to bid on larger commercial jobs which would increase your Revenue to $5 Million per year but you can't afford to buy the expensive Earth Moving Equipment required to acquire those jobs. And if you were to try and rent the Equipment the high rental fees would simply swallow all the profits. This is the problem so many people face today in their own industry. Now let's say you had an excellent Business Credit Score. You would now be able to obtain that expensive Earth Moving Equipment via special Equipment Leasing Programs all manufactures have in place for qualified customers. This will be Brand New Equipment that comes with full warranties. Now you will know you can take on these larger jobs and since you are paying a lease with $1 buyout option you can easily afford the small monthly lease payments for the equipment. You can also rent out your equipment to other contractors at cheaper prices than the competition in between your jobs to generate additional income from that equipment. You will also be able to lease new vehicles in this case a fleet of 5 new work vans. All of this is done without using your Personal SSN as a Guarantee. Additionally, you will be able to bid on Government jobs because your Dunn & Bradstreet Payday Score will be established. As you see there is an enormous difference between the outcome of the Business with No Business Credit and the Business with Excellent Business Credit.
What if I told you this process can be completed in 4 months.
This is exactly what our Business Credit Builder Program does for our clients. We have created a Program based on the fastest and most cost effective way to get you there. We are experts in finding and exploiting the legal loopholes in place to help take your business to the next level. With over 300 clients and we know what works and what doesn't so our clients never have to waste time learning the hard way. Our Program is NO MONEY DOWN!!! We are so confident in our ability to do what we say that we prefer to provide our clients some results before we begin getting compensated. Anyone interested in learning more about how our Business Credit Builder Program can help take your Business to the next level visit us at Plutus Financial Solutions