Friday, December 23, 2016

How to Build Business Credit - Start Up Business Funding

Learning how to start building or repairing credit for your business are imperative. Whether you are establishing a business or have an existing one, building a good credit rating is essential, as it helps to optimize your business operations.

In the initial stages of building business credit, more often than not, it is necessary to use your personal credit background to obtain funding to finance purchases and attain credit. However, the business credit profile should be separated from your personal one, as relying on one's own funding to finance the business leaves you personally liable.

The process to build up credit for your business must commence prior to starting operations. To start building credit immediately you must be looking on establishing the following:

Business as a Legal Entity

To separate your business credit score from your personal credit score it is necessary to establish your business as a separate entity. To qualify as a separate entity the business has to be structured as a corporation or a limited liability company (LLC).

Tax Identification Number

Acquiring a tax ID number (also known as an Employer Identification Number, or EIN) is the next step involved in building valuable credit for your business. Similar to the personal credit score which is associated with the individual's Social Security Number, the business credit reports are associated to a tax ID number. The federal tax identification number can be obtained from the Internal Revenue Service and there are a several ways to reach them:

• Call the IRS Business and Specialty Tax Hotline at 1-800-829-4933.

• Download IRS Form SS-4 from the Internal Revenue Service website.

• Download IRS Form SS-4 from the Small Business Administration website and submit to IRS by mail or fax. Directions for the SS-4 forms are provided online.

Business Bank Account

Opening a business bank account allows you to separate business funds from personal funds. Furthermore, a business bank account can also serve as a bank reference when applying for business credit.

How To Start Building CreditWith A Business Credit Card

As a business credit card can be used as a revolving credit line, it is simplest way to build up credit history with on-time payments. Timely payments eventually improve your company's credit worthiness which facilitates your ability to acquire a business loan. Therefore, use a business credit card for payments whenever possible. Unlike personal credit cards, having multiple active business accounts can be positive, provided that they are in good standing. However, limit the number of business credit cards when beginning and as the company grows you can continue to acquire more.

Business Phone Number

Acquiring a business phone line is important as business credit reporting agencies use the phone number to index your business in their databases. In addition, the credit reporting agencies use the telephone number as proof that you are actually conducting business.

Business Listing

Be sure to supply the exact same business address and phone number to every credit agency and trade credit vendor. Ensure that the business address and phone number are also listed in both the 411 Directory (White Pages) and the Yellow Pages.

A D-U-N-S Number

The D-U-N-S Number is a 9-digit number issued by Dun and Bradstreet that most companies utilize it to verify the credit history of businesses. The United States government and many corporations require their suppliers and contractors to have a D-U-N-S Number. Keep in mind that having a D-U-N-S number is just the beginning. You will need to start building your company's credit profile by doing business with creditors and/or suppliers that report to Dun and Bradstreet.

How to Start Building Credit By Registering with Credit Reporting Agencies

Many of your company's lenders and suppliers report information to the business credit reporting agencies about your company, such as how your business pays its bills or loans. There are many business credit reporting agencies such as D&B, Experian Business, BusinessCreditUSA, FDInsight, and ClientChecker. The majority of suppliers, creditors, and lenders pull their reports from Dun and Bradstreet, Experian and, Equifax Business. Registering an account with these 3 business credit reporting agencies is a good start.

Registering enables your company to start building credit through their credit databases. The database can also be used by potential customers, suppliers and lenders to obtain fundamental information about your company. As it is not mandatory, it may be necessary to ask businesses that you work with to report your timely payments to these business reporting agencies. These submissions enhance your credit rating and verify your registration with the business credit reporting agencies.

Compliance

Before conducting business, it is necessary to obtain all registrations, permits and business licenses that are required in your jurisdiction.

In summary, once the above list has been completed, the process of building business credit profile can commence. Obtaining trade credit with vendors is a good place to start. To build up credit score, it is important to seek vendors and suppliers that are set-up to report your company's payment history to the credit reporting agencies. Naturally prompt payments for purchases are essential in leading to a good credit score. If the business has an existing loan, timely payment of the loan can also help you establish a better business credit score.

As it is with the individual credit scores, it is important to review your business credit scores from credit bureaus once or twice a year. Make sure the information is accurate. Upon finding errors, contact the appropriate bureau and report the errors immediately with proper documentation. As the business credit report affects the operations of the business, it is to your best interests to have these agencies present an accurate picture of your business.

Tuesday, November 1, 2016

Personal Credit Lines

Your own personal line of credit is valuable. A personal loan entitles you to spend up to a specified limit in accordance with your approved credit line. Normally, the maximum amount for cash on demand loan is $8,500 going beyond that you would have to take out a home equity loan. Cash advances taken from your own personal line of credit are obtainable at most ATM machines. When you are approved for a personal line of credit a card will be issued that is usable at ATM machines for your personal convenience. There are four easy ways to use your account, of which most prefer the ATM machines, but you can utilize checks. Your checks are accepted anywhere that accepts personal checks. You may request that a cash advance be transferred into your checking or savings account withdrawing at your own convenience. It is easy to have all your bills placed into one account and the cash advance deposited in order to meet your financial obligations. The four systems work quickly and conveniently without any problems.

A personal line of credit does not come without cost. There are ways to calculate your payments but a minimum amount of $20 is always expected monthly. You may calculate the payment by taking one percent of the account balance rounding off to the nearest dollar amount, add finance charges and fees, this will lead you to your monthly payment amount. The company that you borrow the money will send you a statement each month that you can use to make your payments. You normally can call a toll free number accessing your account giving you the balance and pay amount due on your account.

Cash on demand is a revolving line of credit that credit card holders continue to access for funding up to the limit allowed. The limit is set by your credit standing and your income. The amount of credit that you are allowed may not always be the full maximum amount. In some cases the allotment is based on income and the demand for pay back at the end of each month. This is a short-term payday loan line of credit. People with an excellent line of credit are afforded much liberal terms, a higher amount of credit line and longer time to pay back the amount due.

The line of credit is still issued to those who have less than perfect credit to enable them to rebuild their credit status. In order to get such a line of credit you must come into the office of a finance company, however, you can get a pre approval over the telephone. Finance companies do try to make it as easy possible for anyone who is interesting in borrowing money to set up a line of credit. Many financial institutions work with those who have a less than perfect credit record to help build up their status. When a person pays the financial institution on a timely manner normally they will be given a higher limit to borrow.

Thursday, September 1, 2016

Unsecured Lines of Credit

Most people who are looking for funds for renovations, additions, business expansion, or other financial needs turn to equity lines of credit or other types traditional credit loans. These types of lines of credit are popular and relatively simple to get, but what if you do not have any equity or assets to borrow against? If you find yourself in need of a line of credit but do not have any assets for collateral, or do not want to risk your valuable property you do have, and unsecured line of credit is another option for you.

An unsecured line of credit gives you the cash you need in the timeframe you need just like any other line of credit. Your credit line is based on an amount determined by your credit history, repayment ability, and income and you can use all or part of it as the need arises. The major difference between an unsecured line of credit and a secured one is that you do not have to put up valuable property but will have to pay a higher interest rate.

In order to qualify for an unsecured line of credit you will have to prove that you will be able to repay up to the full amount of the credit line in monthly payments. Your lender will analyze your income to debt level, your credit score and history, your employment history, and may want references. If you have good credit and can afford the monthly payments on the credit line you will probably qualify.

An unsecured line of credit is right for you if you need a credit line but do not have assets to use as collateral. Be careful, however, because it will take more research to find the best deal as they carry higher interest rates than secured credit lines. Talk to the banks in your city to see what the going rate of interest is locally and how much you qualify to be approved for.

National lenders will often have some of the best rates so it is always a good idea to look online for national lender rates. If you cannot find a bank willing to give you an unsecured line of credit you can usually qualify for a credit card, but using a credit card for your cash needs can be risky as many have fees and very high interest. Look into all your options so that you can get the best deal possible on your credit line.

Anthony Griswold creates articles about unsecured financing. He has years of experience in dealing with unsecured lines of credit.

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