Business Credit Scores are a widely debated topic as to their use and what they really mean when it comes to obtaining business financing. Prior to the financial system crash of 2008 there were very few business loan providers or business credit card issuers who cared or even checked business credit.
Today things have changed. The main difference in business credit today is that most banks, business credit cards, and major business lenders are reporting small business credit histories. They are also checking business credit reports before making approvals. This means that you as a business owner must pay attention to your business credit scores just like you do to your personal credit scores.
So what are the Myths and Facts about Business Credit Scores?
Myth # 1 - "Business credit scores can replace personal credit scores and be used to obtain large amounts of financing without anyone checking your personal credit." This is probably the biggest scam going in the business credit market. It is used to separate you from your money. They claim that if you will pay $2,000 to $5,000, then you will have perfect business credit scores that can be used like magic beans to get whatever you want. The old rule applies here, "if it seems too good to be true, then it is too good to be true."
Myth #2 - "Business credit scores are worthless. No one will check or care." Business credit scores are now being checked by most business loan providers, business credit card issuers, equipment leasing companies, and vendors extending credit lines. They are even being checked by SBA lenders to determine approval amounts, repayment periods, and interest rates. Business credit card providers are using them for approval amounts.
Fact #1 - "Your business credit scores will have an impact on your business". With landlords, insurance companies, security companies, and many other service providers now checking your business credit, your business credit scores are going go impact your business even if you are not seeking a business loan. Having business credit scores at or over above 70 with all three major business credit reporting agencies will play a role in things your business will or will not be able to do. Your business credit scores will also impact the number of times that you will have to sign personally for things your business needs.
Fact #2 - "Obtaining good business credit scores is just as much work as obtaining and maintaining good personal credit scores." Nothing in life worth having comes easy, and business credit scores are no exception. Optimizing your business credit scores requires a 1-3-5. This means that you obtain at least 1 bank or major account loan such as a large equipment lease, 3 business credit cards, and 5 vendor lines of credit. Then you have to use them month in and month out and that you pay them on time. It is the same concept for obtaining good personal credit scores.
The good news is that once you take the business finance pre-qualification test you will have access to a comprehensive business credit building system that will help you with all phases of obtaining what you need to build business credit and to maintain good business credit scores. If you are out there on the Internet and someone tells you they can obtain hundreds of thousands of dollars for you using only business credit and no one will care about or even check your personal credit scores, it is a complete scam, and you should run!