You’ll notice in the above credit application that you can’t avoid giving a personal guarantee without having a corporation that is at least 2 years old.  Many people are looking for shortcuts when they start down the path of building their business credit but if you are planning on establishing credit as a sole proprietor or with a new Corporation or LLC then you’re headed down a dead end road.

Most know why they should avoid signing a personal guarantee but I’ll briefly mention that if you sign a personal guarantee then you will have to divulge you Social Security number and the creditors will pull a hard inquiry, if you get approved a new credit account show up on your personal credit file.  Both the new inquiry and the new credit will drag your score down.  Also you won’t be able to use the full credit line without seriously hurting your credit use of you credit score and seriously harming your personal credit report.  Furthermore, if you are late paying your business card or worse if you ever default then you will destroy both your personal credit file along with your business.

There are many other reason why you should avoid a personal gurantee like the plague!  The least expensive short cut out there is to buy an aged corporation that will allow you to show creditors the longevity that they are looking for and enable you skip the Personal guarantee section on Business Credit Applications, like the one we have above.

Tags: aged corporations, building business credit, Business credit application, Business Credit Applications with no perosnal guarantee, shelf corporations

This entry was posted on Wednesday, July 30th, 2008 at 4:53 pm and is filed under Business Credit, Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.