Susan Carter Talks about Low FICO scores when applying for Business Credit

Jan. 13, 2009 - PRLog -- Livonia, MI - Many individuals have great ideas, but cannot get their business up and running because of a combination of bad credit and no capital.  With the proper knowledge, both of these problems can be remedied.

Susan explained that when a business is first started, lending institutions and vendors will often require a personal guarantee in order to extend credit to a new business owner.  Even though the business credit will be under the business name, if the personal credit is poor, they will reject the application.

Susan stated there are three major personal credit reporting agencies:  Equifax, Experian, and TransUnion.  It is frequently reported in the news that every one of these agencies has an error rate of over 70% in reporting personal credit information.  It should be a frequent habit by individuals and business owners to get a copy of all three personal credit reports and review them in detail to be sure that what is being reported is correct, what should be reported is on the report, and what should not be there is removed.  

The goal of a business owner should be to create a business credit profile which is separate from personal credit.  Personal creditworthiness is measured in the financial world by a person’s FICO score.  A business credit profile is measured by the various business credit bureaus, such as Dun & Bradstreet.  These credit bureaus do not report to the personal credit bureaus so even if you start establishing your business with multiple business credit cards, or business lines of credit, they will not damage your FICO scores by showing you are “over extended”.  If the business credit profile is set up correctly than the personal credit is not affected.

Susan stresses how critical it is to keep personal and business credit separate.  Many business owners use their business credit cards for personal expenses.  This sends up a huge red flag to financial institutions as well as the Internal Revenue Service.  Co-mingling of funds and credit can open a person up to personal lawsuits and IRS audits that can get very nasty.  

Obtaining business credit cards can be a great source of funding.  The other advantage of business credit cards is that the more you have, the better your business credit profile.  Unlike personal credit cards, where multiple card usage means a poor credit risk, in the business world the more credit you have extended to your company that is well managed, the better credit risk you become.  This results in even more credit availability and higher lines of credit.  

Susan Carter, author of “Basics of Business Credit,” has created an e-Book that provides instructions on how to set up a business entity correctly from the start.  She has the knowledge to help anyone avoid the trap of having to use personal funds and assets to get their business started.  

Her book is clear, concise, and packed full of information that is invaluable for anyone who needs money to run their business.  Her book informs the reader about the difference between personal and business credit bureaus and how they each work.  
For more information, visit Susan’s website:  http://www.SusansBooks.com  

Contact:  
Start with the Basics, LLC
Phone & Fax:  248-399-7808
Email: Susan@SusansBooks.com


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