Article

Entrepreneurs Ignore Building Business Credit To Their Detriment

It's normally assumed that building business credit is only something that entrepreneurs with bad credit do in an effort to get around personal credit checks. But really there are many other benefits that you should consider.

The first thing that entrepreneurs with excellent credit should consider is that a corporation is considered a 'person' in the eyes of the law. What this means is that in addition to controlling the benefits of the perfect personal credit that they have built up over the years that they can also control the credit of another 'person', your aged shelf corporation. This can allow you to double or triple your credit potential and therefore the opportunities that are available to you in the future. There is no limit to the number of corporations that you can set up, and therefore no limit to the amount of credit that you can control!

Next, even if you have a FICO score over 800, you are still severely limited by the 'strings' build into the personal credit game. If you are using your personal credit for business purchases, then every time a report is pulled you get an inquiry on your credit report. The more inquiries, the lower you scores go.

The other devil is the 'credit use' factor that prevents good credit conscious entrepreneurs from utilizing all of the any credit line. If you have a $10,000.00 credit line you should at most use only $5,000.00. If you are late on a payment then your credit is toast! When you apply for Corporate credit, though, there is never an inquiry on you personal credit and you able to protect and maintain you personal FICO. If you are approved for a credit line of $20,000.00 then you can use 100% of that amount, and instead of damaging your business credit, it generally boosts your credit, provided of course that you pay on time. Using corporate credit instead of your personal credit allows you more FREEDOM.

The main reason that entrepreneurs should consider building credit through a corporation is that it can limit their personal liability. Granted, this kind of protection isn't 100%, but consider that if you are sued without the protection of a corporation, they will absolutely come after all your personal assets and your personal credit. Also, if a judgment is issued against you it will show up on you personal credit file and DESTROY your personal credit. However, if you have a corporate veil established then it becomes very difficult to come after you personally. Any step you can take now to make it more difficult for creditors or litigators to come after you personally is a good thing.

Don't be a skeptic any more, start investigating building corporate credit today, and don't waste time because the credit crunch changes everything daily. Feel free to contact us for more helpful tips.