Business Credit FAQ
Q: What is Business Credit?
A: business Credit is the ability to obtain financing under the name of a business entity. business Credit is separate from personal credit and is based on the assessment of a corporation by business credit bureaus (Dun & Bradstreet and Experian Business).
Q: What is a Corporation?
A: A business that has been granted a state charter recognizing it as a separate legal entity having its own rights, privileges, and liabilities distinct from those of the individuals within the entity. A corporation can acquire assets, enter into contracts, sue or be sued, and pay taxes in its own name.
Q: How many corporations am I allowed to have?
A: As many as you need.
Q: What is the difference between business credit and personal credit?
A: With personal credit, you’ll be limited in the amount of credit you can receive and your LTV (Loan to Value) will affect your ability to obtain further financing. The more you use your personal credit, the worse off your personal credit will be. Personal credit is driven by FICO, and each time a lender requests a credit inquiry, your FICO score will drop by 2 points – this brands you as an even greater credit risk.
With business credit, you are not limited to the amount you can receive, there is no LTV (Loan to Value), and inquiries have no impact on the corporation’s credit score. Your corporation also has the ability to obtain 10 to 100 times the credit you can obtain personally.
Q: What kinds of Business Credit are available?
A: There are two types of Business Credit; trade credit and cash credit.
Trade credit is also known as vendor credit and usually consists of credit from stores such as Staples, Office Depot, Home Depot, Lowes, Dell Financial, Best Buy, etc.
Cash credit is the type you get from traditional credit cards-such as Master Card, Visa, and American Express-as well cash lines of credit from individual lenders.
Q: My business is new. Can I still get lines of credit?
A: With the right strategy any can easily get Business Lines of Credit.
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