Mistakes to Avoid With a Business Credit Builder Program
Many people who start a business know very little about business and corporate credit. This is really to their detriment as business credit is so very instrumental in the establishment and operation of a successful business. Nonetheless, despite being a key component to getting a new enterprise up and running, many people move forward without any real information about corporate credit. One of the best ways for individuals to learn about credit is by participation in a business credit builder program. By doing so, people can learn all of the intricacies of business credit and avoid many of the mistakes that are all too often made.
Our experts at CL King & Associates believe that by participating in a business or corporate credit builder program, individuals have an opportunity to learn their lessons the easy way. That isn't to say that they will not have to learn from their mistakes; rather, they will have an opportunity to learn from the mistakes of others.
Seven of the most common pitfalls which credit builder programs help individuals avoid are as follows:
1) Many people fail to form a separate business entity for their new enterprise. Business credit builder programs will help individuals form an LLC, a corporation, or whatever other business entity makes the most sense for their operation. Because it is necessary to have a separate business entity in order to establish credit, this is a vital step. Operating as a sole proprietorship and self financing your business is the surest way to get rejected by the bank for a business credit card! Why?
2) Many people go directly to Dunn & Bradstreet to build a profile and have not completed a through compliance check. If your corporation or LLC is not in compliance before you build the business credit profile with D & B you can "red flag" your company! You must make sure your business phone line has a 411 listing that the entity has the appropriate business license and many other steps comprise a proper compliance review.
3) Many people apply for credit with companies or organizations which are difficult to obtain credit from. Business vendor and cash credit programs will guide individuals towards credit-friendly outfits which are conducive to establishing good company credit.
4) Many individuals co-mingle their funds. This means that they use one bank account for both their personal and business finances. This is detrimental on several levels, not the least of which is that it allows creditors easy access to personal funds in the event of non-payment. Credit builder programs will help individuals learn how to keep their funds separate to avoid such problems.
5) Many individuals fail to know how to get vendors to report good payment history to build your corporate credit profile with D & B or Corporate Experience. With out vendors reporting your corporate credit profile simply will not be built!
6) Many individuals fail to use vendor account properly to help put your business in the best position to maximize cash lines of credit with the banks!
7) Many people seek credit at the wrong time. In other words, it is common for people to apply for credit when they are desperate and they are out of money, credit is bad. The time to build corporate credit is ideally at the start of your company and also when your business does not need it!
In short, it is not always easy to establish business credit. This is especially true in today's economy. With something as important as business credit, individuals should really seek professional help or mentorship through business or corporate credit building agencies.