Guarantee of Obtaining Corporate Credit
Warning! You have probably heard a lot of different companies making claims about how they can guarantee to get your business or corporation, credit. They may say things like, “with our credit building program, we guarantee that you will get up to $20,000 or $50,000” and so on.
The key wording is “up to”, because they really do not know if you will get the full amount of funding needed for your business. What they know that you do not is the lending criteria of the common business creditors. They know the most likely creditors that will say yes based off of your business credit profile and your personal credit scores.
These can be valuable services, since they can help to decrease the time it takes to fund your business and help to find the creditors that are more likely to approve your credit application. However, what is not in the sales copy is the fact that most of the credit building relies on retail vendor credit, such as, your local office supply stores or home supply stores to build out a Dun & Bradstreet credit profile.
To obtain “real money” lines of credit, you are going to need a good personal credit score of at least 620 but preferably 680 or better. Don’t worry bad credit does not stop you from building credit in your business the process may just take longer.
Guaranteed credit card or lines of credit
These services may even offer a credit card just for being their client, but it is usually only credit for their services and/or products. There have even been companies offering programs were they claim you can receive up to $100,000.00 in cash credit for a fee of $5,000. Does that sound too easy? Keep in mind, if it was that easy, most small businesses would have an easy time obtaining the needed funding.
If you personally have $5,000 that you can utilize to build corporate credit, you would be better served going to a bank like Wells Fargo and getting a business secured credit card which can become unsecured with a good payment history. Just remember “Buyer Beware.” If it sounds too good to be true, it probably is.
Buying Aged Companies / Aging Your Business
There is a popular belief that you can quickly obtain a large amount of credit by purchasing a Shelf-Corporation. Well in some cases you can. After all, most business credit applications will ask for a personal guarantee if the company is less than 2 years old. In order to do this, you really have to investigate the so-called shelf- corporations.
The first thing you need to investigate is whether or not a negative history is attached to the company and that the tax I.D. number is as old as the company .It is also important to make sure all of the companies documentation is up to date and the company should have a bank account that is no less that 6 months older than the company, unless the company has been in business for a long time and the bank account is about 1-2 years old. Basically this should be a real company that has been doing real business, not just documents someone filed in hope of selling it off as an aged corporation at a later date.
Do your homework, because there are a lot of companies that say they have aged corporations or shelf-corporations they can sell you. Always ask a lot of questions and make sure that the corporation you are purchasing is a real business. Not just papers filed with the state.
The business credit industry is not regulated by the government the same way personal credit is, therefore you will have to do your homework when speaking with a credit building service and ask a ton of questions.
Just because a company has been in business for a long time, does not mean they are not over charging for their services or that you are getting the kind of service that is advertised. If the program sounds too easy or too good to be true, then you are most likely wasting your money. Keep this in mind. It takes years to establish a good business credit history not months.