A Proven System for Financial Credibility

Today there are approximately 26.5 million small businesses in the United States – and over 92% of these businesses use their personal credit in their business.  Investment capital and trade credit is the lifeblood of a business and as a result small businesses are dependent on their personal credit score!           

“The dependency on personal credit is the primary factor of why most small businesses fail.”

The business credit education, service, and coaching marketplace is driven by the ever increasing demand of small business owners who need access to funding and credit sources outside of their personal network.  Often a business in its start-up and growth stages exhaust the availability of personally guaranteed credit based on their personal credit score.  Once that personal credit is exhausted out, the business owner has little or no access to alternative funding sources. The result is over 50% of small businesses fail in their first three years.

Our Business Credit Advisors offer the tools and methods for small business owners to create and build a business credit asset that enables consistent access to credit and cash.

Separating personal credit from business credit eliminates one of the several critical errors a business owner can make which results in the “piercing of the corporate veil’s limited liability”.  When a business owner intermixes personal and business credit, their personal assets are potentially at risk in the case of litigation – all the more reason why business credit development is crucial for every small business. A Business Credit Asset™ enables the business owner to create a financial capitalization asset that can be transferred with the business, in an exit for example.

Expert Credit Consultants, LLC specializes in establishing business credit and funding using our exclusive Business Credit and Funding Suite as well as consumer credit restoration and optimization.  www.ExpertCreditConsultants.com.

8 Ways to Boost Your Score

1.  GET RID OF YOUR COLLECTION ACCOUNTS, CHARGE­OFFS AND LIENS.

Did you know that paying a collection account can actually reduce your score? Here’s why: credit scoring software reviews credit reports for each account's date of last activity to determine the impact it will have on the overall credit score. When payment is made on a collection account, collection agencies update credit bureaus to reflect the account status as "Paid Collection". When this happens, the date of last activity becomes more recent. Since the guideline for credit scoring software is the date of last activity, recent payment on a collection account damages the credit score more severely. This method of credit scoring may seem unfair, but it is something that must be worked around when trying to maximize your score. How is it possible to pay a collection and maximize your score? The best way to handle this credit scoring dilemma is to contact the collection agency and explain that you are willing to pay off the collection account under the condition that all reporting is withdrawn from credit bureaus. Request a letter from the collector that explicitly states their agreement to delete the account upon receipt/clearance of your payment. Although not all collection agencies will delete reporting, removing all references to a collection account completely will increase the credit score and is certainly worth the involved effort.

Charge­offs and liens barely affect your credit score when older than 24 months. Therefore, paying an older charge­off or a lien will neither help nor damage your credit score. Charge­offs and liens within the past 24 months severely damage your credit score. Paying the past due balance, in this case, is very important. In fact, if you have both charged­off accounts and collection accounts, but limited funds available, pay the most current past due balances first, then pay collection agencies that agree to remove all references to credit bureaus second.

  

2. GET RID OF YOUR PAST DUE ACCOUNTS.

Within the delinquent accounts on your credit report, there is a column called "Past Due". Credit score software penalizes you for keeping accounts past due, so Past Dues destroy a credit score. If you see an amount in this column, pay the creditor the past due amount reported in order to be current.

  

3. AUTHORIZED USER.

If you have a spouse or parent with a credit card in good standing, you can ask them to add you as an authorized user. They don't have to actually give you a card. But by being an authorized user, their payment history on this card will also report on your credit.

  

4. GET RID OF YOUR LATE PAYMENTS.

Contact all creditors that report late payments on your credit and request a good faith adjustment that removes the late payments reported on your account. Be persistent if they refuse to remove the late payments at first, and remind them that you have been a good customer and that you would deeply appreciate their help. Since most creditors receive calls within a call center, if the representative refuses to make a courtesy adjustment on your account, call back and try again with someone else. Persistence and politeness pays off in this scenario. If you are frustrated, rude, and unclear with your request, you are making it very difficult for them to help you.

  

5. CHECK YOUR CREDIT LIMIT(S) AND EVENLY DISTRIBUTE THE BALANCES YOU ARE CARRYING.

Make sure creditors report your credit limits to bureaus. When no limit is reported, credit scoring software scores the account as though your current balance is "maxed out". For example, if you know that you have a $10,000 limit on your credit card, make sure that the limit appears on the credit report. Otherwise, your score will be damaged as severely as if you were carrying a balance of the entire available credit. Credit scoring software likes to see you carry credit card balances as close to zero as possible. If it is difficult for you to pay down your balances, read the following guidelines to maximize your score as much as possible under the circumstances:

• There are different degrees that scoring software can impact your score when carrying credit card balances.
• Balances over 70% of your total credit limit on any card damages your score the most. The next level is 50% of your balance, then 30% of your balance.
• In order to maximize your score without having to pay down your balances, evenly distribute your credit card balances among all of your credit cards, rather than carry a large balance on one credit card. For example, if you are carrying a $9000 balance on a credit card with a $10000 limit, and you have two other credit cards with a $3000 and $5000 limit, transfer your balances so that you have a $1500 balance on the $3000 limit card, a $2500 balance on the $5000 limit card and a $5000 balance on the $10000 limit card. Evenly distributing your balances will increase your score. Another option is to ask the company if they will increase credit limit on a card. Just don't max out this card. Keep the ratios low.

  

6. DO NOT CLOSE YOUR CREDIT CARDS.

Closing a credit card can hurt your credit score, since doing so effects your debt to available credit ratio. For example, if you owe a total credit card debt of $10,000 and your total credit available is $20,000, you are using 50% of your total credit. If you close a credit card with a $5,000 credit limit, you will reduce your credit available to $15,000 and change your ratio to using 66% of your credit. There are caveats to this rule: if the account was opened within the past two years or if you have over six credit cards. The magic number of credit card accounts to have in order to maximize your score is between 3 and 5 (although having more will not significantly damage your score). For example, if a card was opened within the past two years and you have over six credit cards, you may close that account. If you have more than six department store cards, close the newest accounts. Otherwise, do not close any at all.

  

7. OPEN BUSINESS CREDIT CARDS.

If you own a business, you should not be using your personal credit on your business expenses. Obtaining a business credit card should be one of the first steps in starting a business. Business credit cards do not report to the personal credit bureaus unless the person pays the card late. Given that fact, any debt carried on these cards does not hurt the credit score if it is not reported. You can carry credit card debt on these cards without hurting your credit score. Just apply for business credit cards now to start building this segment of your credit. The best credit card in this case is one that will help you build your business credit.

  

8. KEEP YOUR OLD CREDIT CARDS ACTIVE.

15% of your credit score is determined by the age of the credit file. Fair Isaac's credit scoring software assumes people who have had credit for a longer time are at less risk of defaulting on payments. Therefore, even if your old credit cards have horrible interest rates, closing those cards will decrease the average length of time you’ve had credit. Use the old card at least once every six months to avoid the account rating to change to "Inactive". Keeping the card active is as simple as pumping gas or purchasing groceries every few months, then paying the balance off. An inactive account is ignored by Fair Isaac's credit scoring software, so you won’t get the benefit of the positive payment history and low balance that card may have. The one thing all credit reports with scores over 800 have in common is a credit card that is twenty years old or older. Hold onto those old cards, trust me! Preparing credit is a slow and time consuming process. Full knowledge of your credit profile and how it represents you to creditors and credit bureaus is pivotal to full credit restoration success. Credit bureaus always advise individuals that they have a right to dispute their own credit files, but when the rights of the Credit Bureaus slow you down, you know where to ask for help.

Expert Credit Consultants, LLC specializes in establishing business credit and funding using our exclusive Business Credit and Finance Suite as well as consumer credit restoration and optimization services. www.ExpertCreditConsultants.com.