When done correctly, business credit is obtained without the SSN being provided on the application.
This means there is no credit check by the business owner to be approved. This also means that anyone who has bad, even horrible personal credit can still be approved for business credit.
Reports to commercial credit reporting agencies, not consumer credit reporting agencies.
So, it does not have an adverse impact on the owner’s consumer credit because it is not reported to the consumer agencies.
This means that using the account, even more than 30%, will not have any adverse impact on personal scores.
And there are no personal credit inquiries when you apply for business credit, as long as you don’t provide your SSN.
30% of your total consumer score is based on utilization, so if you use your personal cards for your business, and if you use those cards, you’ll lower your scores. Using more than 30% of your limit WILL result in a score decrease
So if your limit is $1,000, having a balance greater than $300 lowers your scores. This means that 40% of your total score is damaged. With true business credit, 0% of your score is affected.
10% of your total consumer score is based on inquiries, so if you’re using your personal credit to apply for loans and business credit, your scores will drop as a result of those inquiries.
Also, those inquiries can stay with you for an extended period of time, which will affect your ability to borrow more money.
And some unsecured business loan sources won’t even lend you money if you have two or more inquiries on your personal credit reports within six months.
Credit does not report to consumer agencies, so neither inquiries nor utilization have any effect on your consumer scores.
How to devalue your business
Anyone who has sold or bought a business will tell you the importance.
All potential buyers can easily get extensive information about your business, just by getting your business credit report…that anyone who wants it can get.
This means they’ll quickly learn details about your business, including:
• Credit scores
• High credit limits
• Performance of past payments
• Employees
• Income
And much more…
Now that you know how easy it is to get extensive credit and financial information for a business, if you were a buyer, wouldn’t you?
Based on your business credit report, would you like to buy your business?
Does your report reflect that your company is “established”, does it show that you pay your bills, does it look like a successful company according to your report?
If you could choose between two companies to buy that were the same in every way except trade credit, which would you buy…
… The one with a very limited or no credit profile… or one with a credit profile that reflects good payment performance, and one with available credit.
