There is a sting that comes along with having bad credit. It is a financial affliction that affects millions of people in various ways. Some people cannot finance the home of their dreams, others must ask friends or family to co-sign for their cars, while others are forced to pay super high deposits for things like cellphones, apartments, and more. These are just a few of the drawbacks associated with having bad credit. Phoenix small business investing experts point out that bad credit also painful for entrepreneurs and small business owners.
Phoenix small business loans professionals know that getting a business loan is no easy task, and that it is even more difficult if you have bad credit. And unfortunately, money is one of the first things needed to get a business up and running. Phoenix small business investing officials highly suggests that business owners in this situation try to establish business credit rather than get a bad credit business loan.
Establishing Business Credit
Phoenix small business investing experts state that there is a simple reason for this: your business credit, if properly established, is not connected to your personal credit. This means that your personal credit will not be checked if you apply for a loan under your business name in the future. It also means that if your business and business credit suffer, you will further damage your personal credit and finances. Here are simple financial tips on how you can get started building business credit.
Formalize Your Business
Establish an LLC, sub chapter S-corporation for your business. This will help lenders clearly identify your company as a business that is completely separate from your personal finances.
Business Phone Line or Setting Up Your Business Phone Number
Next, Phoenix small business investing experts suggest getting a phone line that is in the formal name of the company. Call phone companies and make sure that you sign up with one that reports their customers’ payment history to the credit bureaus.
Business Checking Account
Establish a business checking account that is also under the formal name of the business. Make all business transactions with this account and not your personal accounts.
Vendor Credit
Set up trade or vendor credit by finding companies who are willing to finance you for supplies or equipment, for which you can pay them off over time. Find a company that does not need your social security number or any personal information that can be tied to your personal finances. Everything should be done with the business’ information and business finances.
Business Credit Cards
Finally, Phoenix small business investing officials state that you should get a minimum of three business credit cards–also under the company’s formal business name (see a pattern here!). It is important to ensure that the companies you go with also report their accounts, payment history, and so on to the credit bureaus. And just as with vendor credit, make sure that the cards do not have to be tied to you or your personal finances. It may take some hunting to find company’s that do not require this, but it is well worth it to search.