Key Reasons To Build Corporate Credit
Small business owners must develop a business credit profile separate from their personal credit report
- There are two types of credit bureaus, personal and business.
- You will begin developing a business credit profile when payments are reported to the business credit bureaus
Vendors report your payment history to business credit bureaus that have a separate profile on your business with a separate credit score from your personal credit score.
Working with vendors who report to the credit bureaus adds trade references to your business.
- Most business credit applications ask for trade references.
- Many companies won’t grant credit without a minimum of three trade references.
Your personal credit report does not reflect any of the business activity.
- Access to credit personally is not held up by business activity that shows on your business credit profile.
Personal credit scores are not affected by business payments and credit lines.
- If you have not established a business credit profile, vendors and lenders have nothing to reference except for you personally; which forces an inquiry on your personal profile and a personal guarantee.
- Because there are no laws or regulations regarding corporate or business credit; once you have personally guaranteed any type of credit lines or loans, the vendors or lenders you are working with now have cart blanche to checking up on your personal profile at any time.
- Every inquiry on your personal credit report can lower your score between 5-10 points
When working with pillar 3 vendors, even though they require a personal credit check and guarantee in most cases, they report your payment experiences to your business credit
- This allows you to have more credit available personally and in your business
When you have a structured entity such as a corporation or llc, there is more separation of business and personal credit to the share-holders because of the benefits the corporate structure provides.
Pillar 1-2 vendors don’t typically inquire on your personal credit.
We have separated companies that grant credit to businesses into three distinct pillars. Working with each of the three pillars of Corporate Credit Vendors benefits your personal and business credit. To be considered a Tier 1 – 3 Corporate Credit Vendor, a company must grant credit to businesses.
This Chart Depicts The 4 Pillars Of Finance And The Vendors Who Offer Business Credit |
Requirements: |
Pillar 1 |
Pillar 2 |
Pillar 3 |
Pillar 4 |
Personal Credit Check |
Rare |
Rare |
Frequent |
Frequent |
Personal Guarantee of Business Owner |
Rare |
Rare |
Frequent |
Always |
Business Credit Check |
Occasionally |
Always |
Always |
Always |
Reports to Business Credit Bureaus |
Occasionally |
Occasionally |
Occasionally |
Never |
Reports to Personal Credit Bureaus |
Rare |
Rare |
Rare |
Never |
Trade References |
Occasionally |
Frequent |
Frequent |
Frequent |
Ease of Obtaining Business Credit |
Easy |
Moderate |
Challenging |
Challenging |
If Client Defaults on Payment |
Reports to Business Bureaus |
Reports to Business Bureaus |
Reports to Personal and Business Bureaus |
Legal Action |
Types of Vendors |
Companies whose clients include start-up businesses. i.e. Office supply stores. |
Companies working with businesses in the growth and stability phases of a company. |
Banks, Visa, MasterCard, American Express, and other major lending institutions. |
Investors.
i.e. venture capitalists or angel investors. |
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Zapper Credit Solutions
777 N. Rainbow Ave. Ste#250
Las Vegas, NV 89107
Tel: 1-866-854-5513 |
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