My Business Credit Journey to 1,000,000

Defaulting is something that we know occurs, it really does, but I try my best not to talk about it because many people who acquire business credit seem to think that it is ok to default once there is no personal guarantee in the business credit account in question.

We all strive to acquire lines of credit, whether it be cash lines or vendor lines, with NO Pg for various reasons. Some of us have bad personal credit and some of us simply do not want to attach the risk of doing business to your personal credit. The issue of defaulting on accounts has come up in conversation with a number of clients and I have spoken to one or two people who claim that the creditors try to attach the charged off account to their personal credit. I have not personally seen anything like this but I have seen defaulted accounts affect a new business.

There seems to be a belief that one can start one company, default on the accounts and start another one without it being an issue to get business credit all over again. While this may be true kind of in theory(as the defaulted accounts have nothing to do with you are your new business), I have recently seen this hurt a client and badly. He previously had a corporation with a business credit account with Office Depot(one of the first revolving accounts that you get), and was unable to pay it off. One year later he started a new business and proceeded to get an account with office depot again, and was approved. He used the card a couple of times and one day, while in the store, he realized the card was turned off. He then called Office Depot and they said that they realized that he had another card with a previous business that was not paid. When he logged into eupdate, he realized he paydex was gone and his corp was rated as high risk. His credit file now had a note that said that “A Executive Search revealed that he was an executive of another corporation”. They basically tied the old corps bad credit to the new one.

This situation should give you an idea of what is possible and all precautions should be taken when dealing with business credit and potentially defaulting on accounts. Business credit is not free money, :S,

Marc