What is Business Credit?

Business Credit, sometimes referred to as Trade Credit, is credit that is established under a business's name instead of the owner's name.

Business credit permits a business owner to use their business credit profile and score for financing - NOT their personal credit scores.

All too many small to medium sized business owners know nothing about business credit so they end up funding their business using their personal credit until they can’t obtain any more personal financing. Then they are in serious trouble, their personal credit is shot, they lose their personal assets, even file personal bankruptcies, all to get rid of business debt. With business credit, this doesn’t need to happen as the business owner them self isn’t liable for the business debts, only the business is.

Having business credit will provide any business owner with some major advantages.

For one, the business can obtain A LOT more money in approvals. The Small Business Administration states

that business credit approvals are typically 10-100 times higher than consumer credit approvals.

There are also many sources that require no personal credit check. So, even business owners with challenged credit can be approved for thousands of dollars of credit for their businesses.

Business credit can be built quickly, much faster than consumer credit. It takes 6 months for an initial consumer credit score to even be established. Then, since the length of time you’ve had personal credit factors into the score, it could take years to have an excellent personal credit score. With business credit, it is very practical for a business to have an excellent business credit score within 90 days or less, then build that credit to a point where the business is getting $10,000 credit card approvals within 6 months or less.

When built the right way, the owners can commonly qualify with no personal guarantee (PG). No PG means business owners can access cash for their businesses without the personal liability. That means in case of default, the lender couldn’t pursue the personal assets of the business owner.  To qualify for most business credit sources with no PG, the business must have a positive business credit score established with the appropriate business credit reporting agencies. The two most commonly used business credit scores are the Paydex score from Dun and Bradstreet and the Intelliscore from Experian.  And, again, you will need credit with all the major business credit agencies, not just one.

Once a positive business credit score is established, many merchants will then approve the business owner for credit in the business's name. Thousands of major merchants offer business credit. But most don't promote their business credit programs, so they are difficult to locate. In addition, only approximately 10% of vendors report business payments to the business credit bureaus unless the owner is late or defaults, which is why the majority of small to medium sized businesses have either no business credit or bad business credit. Just a few of the merchants offering business credit that we can help you obtain for your business include Chevron, Dell, Staples, Best Buy, Apple, and Lowes. Once business credit is established and paid as agreed, the business credit limits will continue to increase and businesses can then be approved for even more credit as well as cash loans in the business name.

It is very practical to build your business credit to where you can obtain $10,000 limits with major credit card accounts within 6 months. Just pick up the phone to call us and get started.

Business credit is one of the strongest assets any business can have.

Don't be one of the 95% of small businesses that fail within the first five years because of lack of funding. Eventually you WILL need to borrow money for your business. Secure it BEFORE you need it.

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

Business Credit Involves More Than Only Dun and Bradstreet

You have most definitely heard of Equifax, Experian, TransUnion, and the FICO score before as they are household names.

A few business owners have even heard of Dun and Bradstreet, a DUNS number and a Paydex score. But most have not heard of an Intelliscore from Experian's Business Division or a Small Business Credit Risk Score from Equifax's Business credit reporting division.

Entrepreneur.com reported that less than 10% of business owners have any knowledge whatsoever of business credit.

Have you been personally affected by the changes in economy over the last few years? Many creditors have lowered credit limits while others deny applications that once would be easily approved. This means less money for your business, making it tougher and sometimes seemingly impossible to do business.

Have you tapped out your personal credit on financing your business? Well, stop and listen up. We will find you $50,000 or more in business credit. Business credit is still vastly available because 90% of business owners know nothing about it. Within a few months you will qualify for thousands in real useable credit. Within 6-12 months you could have access to over $50,000 in revolving credit with major retailers. In 1-2 years you can then continue on to qualify for $100,000-$250,000 based on how you utilize your newly acquired credit.

Business Credit and Financing IS available and waiting. And this is credit you can use to build the company of your dreams without the personal liability.

Call us today to get started and be on your way to $50,000 in credit approvals with no personal guarantee and regardless of personal credit history.

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

Experian Business Scoring

 

Dun & Bradstreet is the primary company used to evaluate business credit and issue a credit score known as a Paydex score.

There are also other companies that provide similar credit evaluation services to businesses based on their independent databases. One of them is Experian's Business Credit Division who offers a credit score known as an Intelliscore.

Experian is one of the three major consumer credit rating bureaus, but also provides business credit evaluations for over 27,000,000 small businesses and corporations. Experian's model is designed for companies that provide goods and services to small businesses.

Some of the items listed on Experian's reports include Business credit scores and credit summary, Key facts about the business, Corporate registration and contact information, Summaries of collections and payments, Uniform Commercial Code filing information, Banking, insurance and leasing information, Bankruptcy filings, Judgment filings, and Tax lien filings.

The Experian Intelliscore ranges from from 0-100 with a lower score indicating a higher risk for serious delinquency.  The 0-100 is a percentile score that reflects the percentage of businesses that score higher or lower than the specific business being looked at. For example, if the business has a score of 20, this means that company scores better than 19% of other businesses.  That also means that 80% of other businesses score higher than that business.

Payment status on commercial accounts is treated much differently than personal accounts, and this accounts for about 50% of an Intelliscore. On the personal side, a consumer has 30 days after a payment is due before a late payment can be reported on their credit. But on the commercial side, a creditor can report a late payment the day after it's due.

Approximately 15% of  an Intelliscore is based on the amount of derogatory items and public records. Liens, judgments, bankruptcies, UCC filings and other derogatory items indicate that your company has had financial trouble in the past. Before letting a bill or credit obligation get to the courthouse, see if there is an alternative that might work. Reach out to the person or company that you owe money to and see if some sort of arrangement can be worked out. If you are dealing with a collection agency or other company, they may be willing to work out a settlement with you. It's almost always more efficient for them to work with you directly than through the courts.

Approximately another 15%  is based on Credit Utilization; specifically, the ratio of account balances to recent high credit balance, the ratio of delinquent balances to credit limits, and balances carried in relation to the rest of businesses in the same industry. Since many business credit accounts don’t have credit limits, this ratio is used as an indicator of how much financial stress a business might be experiencing. The assumption is that the closer a business gets to its highest historical debt amount, the more difficult it could be for that business to make its payments on time.

Approximately another 10% of the score is based on Payment Trends. They are also a part of the overall payment status factor that accounts for 50-60% of your score. If you are paying your bills increasingly late, your payment trend will show that your average DBT is increasing, and your score could take a hit. In contrast, paying your bills on time or early will lower your average DBT and improve your score. Slow or late payments trends, as well as total number of delinquent accounts are the most important factors to consider within the payment status category. Days Beyond Terms (DBT) indicates how many days beyond terms your bill payments are. In consumer credit, a bill is considered late when it is at least 30 days overdue. But in business credit, there is a wide variety of payment terms such as Net 30, Net 60, etc. So, for example, if a business is supposed to pay its bills within 60 days and the business pays on day 67, the DBT is 7. Your business credit will be negatively impacted the higher your DBT is.

Approximately the last 10% of your credit score is based on Company Information. This is related to your business’s industry type, and is especially important because certain industry types are automatically considered high risk. Make sure this information is correct so your business is not being categorized in the wrong industry. Additionally, information such as how long you have been in business, number of employees, business owners, and contact information is listed here. This information needs to be accurate and congruent with any application for financing. If a bank or other lender is told your business is in a certain industry but then checks your business credit and a different industry is listed, it may well result in a decline. Ensure your SIC and NAICS codes are correct

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