Home Advertise Contact Blog Advertiser Login RSS
Newsletter Signup

Buy A Business Opportunity of Franchise
Home-Based Businesses
Choosing a Business Opportunity Growth and Profit Marketing and Sales
Plans and Goals Running Your Own Business Start-Up
Working From Home Entrepreneur Exchange Feature Articles
Opportunity Community Opportunity Focus In The News
Come Read Our Featured Articles About Business Opportunities, Franchising, Business Opportunity News and More
Are into healthy living? Do you have an entrepreneurial spirit? If so, you should read about this skincare, beauty and hair care product business opportunity. A company that is pioneering the...
Did you know that you can operate your own business that helps mid to large sized companies with their energy efficiency? Yes you can with this clean technology (cleantech) energy management...
Are you into healthy living? Do you have an interest in working for yourself? Well then, you should check out this nutrition and wellness product business opportunity that enables you to be a top-selling health...

Sponsors

STARSCAPES®
Imagine making up to $500 to $1,800 a day! Call or click now see how you can get your business for FREE! (602) 679-0257
Promotional Products Home Business
Run Your Own Business. Be Your Own Boss. Earn Great Profit Potential. Start At A Low Cost. Try It For Free!
I-insureme
$$$ BUILD HUGE INCOME SELLING SOMETHING EVERYONE MUST HAVE $$$ Call our 24-hour message line at 301-276-5575 now!
Carelumina
Make up to $1,000/week! We are changing the industry with our physician formulated state-of-the-art products & services!
CTFO
TAKE A FREE POSITION NOW WITH CTFO SELLING CBD HEMP OIL! Join The Hottest Wellness Trend & Next Billion Dollar Industry.
NUMedia
NEW OPPORTUNITY JUST LAUNCHED! Try it before you buy it! Click To Get Your 15-Day FREE Trial! Daily payouts no waiting!
Here's the Quickest & Easiest Way To Earn Passive Income
Absolutely Remarkable Money Making Program! Many come up with excuses when they are afraid to take action! BE DIFFERENT!
Home-Based Travel Business Making $$$$
Cash in with us on the Multi-Trillion Dollar Travel Industry by working as an independent Affiliate for World Discovery!
How Many Leads Does It Take To Close A Sale?
This article is now live on our blog and I know could be very insightful for many. Read On
It Takes a Hot Voicemail to Land a Warm Lead
If you're a successful entrepreneur who provides others like you the chance to follow in your footsteps... Read On
 
Resource Center > Article
Small Business Credit Basics: Part I
Share this Article:

Okay, you’re thinking about starting your own home-based or other small business. And whether or not you start from the ground up or buy into an already existing business opportunity, licensee opportunity, distributorship or franchise, the issue of how good (or bad) your credit may be is bound to come into play at some point.

What many new entrepreneurs fail to realize is that their personal credit score and their business credit score are two very distinctly different things and yet they are intrinsically linked. How, you ask? Well, it’s a little bit of a chicken and egg proposition. When it comes to borrowing money to start or grow a business, lenders of all sizes and kinds want to see some proof that you’re a good risk. But proving you’re a good risk when you can’t get a business loan to begin with is tricky. For many upstart prospective small business owners, that’s where the personal intersects with the professional in ways that they may not be aware of and have to plan for earlier rather than later.


But before we address that issue more specifically, let’s cover some more basics…

Personal versus Business Credit: Understanding the Difference

The biggest difference between your personal credit and your business credit is the way it is tracked and recognized by lenders. Where your personal credit history is directly linked to your social security number and is measured on a FICO scale of 300 to 850, with a higher score connoting less risk, your business credit score is a whole different animal. It is linked to your EIN (Employer Identification Number), also known as your Federal Tax Identification Number.

Having an EIN will enable you to apply for a D-U-N-S® number. This is the number that connects you to Dun & Bradstreet, the standard bearer when it comes to business credit bureaus. The business credit score attached to your D-U-N-S® number is called your Paydex score. It is based on a scale of 0 to 100, with 80 and above being optimal. This score is more straightforward in many ways than is a personal credit score in that it only looks at two things―whether or not a business pays on time and whether or not it meets its creditors’ terms.

So, does every small business owner need an EIN and everything that goes along with it? The answer is “no.” Sole proprietors and certain other types of business owners do not need an EIN. (For a closer look at who needs an EIN and why, click here on the IRS website.) But those same individuals need to know that the road to borrowing money can be much harder without it.

Moving Your Credit from the Realm of the Personal to the Professional

When it comes to building your credit in the eyes of lenders, personal accountability is the best place to start for sure. Having your own personal checking and savings accounts, with an average positive daily balance that you manage effectively, as well as a strong personal credit card history are both critical if you want to make the leap to establishing strong small business credit.

And while not everyone who is a small business owner will want or even need to make that step, many of them don’t really realize what they are risking by not taking it. The fact is that as small businesses begin to grow and flourish, becoming steadily more complex both legally and financially, separating personal credit from business credit isn’t just convenient, it’s absolutely necessary.

Putting your personal credit history on the line to start your business or even to keep it going actually can be very dangerous. If your business goes under, so will you. And who wants or can afford to lose their house or their car, especially when things on the professional front aren’t going according to plan? Business owners who protect themselves legally and separate their personal lives from their business endeavors on every level and who do it sooner rather than later may save themselves a lot of grief in the long run.

However, simply establishing a business credit report is not enough. In fact, having no activity on a business credit report can actually hurt your score and therefore your chances of getting the financing you need, sometimes even more than not having one at all.

Building a solid credit history for yourself and then your company over time is a big commitment. It means starting early, moving slowly and steadily, and taking concrete steps to get the job done right.

That said, join us tomorrow when we will provide you with some simple steps you can take to do just that.

Click here to view Part II now!

Related Blog Posts

Happy 2018! With each new year comes a chance to set and achieve new goals. Don’t let another year go by and not accomplish your goals! Business Opportunity Best New Year’s Resolutions will help you stay on track to make 2018 your best year yet!

The best way to make sure 2018 is going to be...

Stay ahead of the curve and prepare your business with these Top 4 Small Business Trends of 2018!

With the end of 2017 in sight, everyone is getting ready for the new year. It’s an exciting time of year. People are wrapping up the old, and prepping for the new. Part of the fun of the new year...

With your friends and family in for the holidays, how will you get work done as a home-based business owner? Make the most of your work day and vacation time with these 7 Tips for Home-Based Success During the Holidays!

They say home is where the heart is. Nothing could be truer during the...

Have you always wondered about running a home-based business? Are you looking for tips to make your home-based business a success? Look no further! Check out these tips and business opportunities!

Running a home-based business may seem like it’s all fun and games, but it can be tough. People...

These four top companies are giving back this holiday season to help women in need and foster entrepreneurship among women. Check out these companies donating to empower women and how your company can do the same!

The end of the year is approaching and companies are looking to donate to the...
 
   
Entrepreneur's Source for Everything Business Opportunity and Franchise Related

I had the pleasure of chatting with Shawn Pigg, CEO of Hotels Etc. for BusinessOpportunity.com's Podcast series that will be released very soon on our new Digital Platform.  Here is the transcript from that call for our regular RSS feed subscribers who get all of our posts first.

If you would...
Read More


Premium Sponsor