When done correctly, business credit is earned without the SSN being provided on the application.
This means that there is no credit check by the business owner to get approval. This also means that anyone with bad, even horrible, personal credit can be approved for business credit.
Report to business credit reporting agencies, not consumer reporting agencies.
So it does not have an adverse impact on the owner’s consumer credit because it is not reported to consumer agencies.
This means that using the account, even above 30%, will not have any adverse impact on personal scores.
And there are no personal credit inquiries when you apply for business credit as long as you don’t provide your SSN.
30% of your total consumer score is based on utilization, so if you use your business cards for your business and if you use those cards, it will lower your scores. Using more than 30% of your limit WILL RESULT in a score decrease
So if your limit is $ 1,000, having a balance greater than $ 300 lowers your scores. This means that 40% of your total score is damaged. With true business credit, 0% of your score is affected.
10% of your total consumer score is based on inquiries, so if you are using your personal credit to apply for business loans and credit, your scores will drop as a result of those inquiries.
Also, those inquiries can stay on your account for an extended period of time, affecting your ability to borrow more money.
And some sources of unsecured business loans won’t even lend you money if you have two or more inquiries on your personal credit reports within six months.
Credit does not report to consumer agencies, so neither inquiries nor utilization have any effect on your consumer scores.
How to devalue your business
Anyone who has ever bought or sold a business will tell you the importance.
Extensive information about your business can be easily obtained by all potential buyers, just by obtaining your business credit report … which anyone who wants it can obtain.
This means that they will quickly learn the details of your business, including:
• Credit scores
• High credit limits
• Performance of past payments
And much more …
Now that you know how easy it is to obtain extensive credit and financial information for a business, if you were a buyer, wouldn’t you get it?
Based on what is on your business credit report, would you like to buy your business?
Does your report reflect that your business is “established”, does it show that you pay your bills, does it look like a successful business based on your report?
If you could choose between two companies to buy that were the same in all respects except trade credit, which one would you buy?
… The one with a very limited or no credit profile … or one with a credit profile that reflects good payment performance, and one with available credit.