19 Nov Debunking Three Major Business Credit Myths
Many people don’t really understand how consumer credit systems work, and many more are ignorant about how a business credit system operates. Am going to talk about some common “myths” associated with business credit and differentiate the facts from fiction in this article.
Myth #1: There’s no difference between business credit and personal credit
This sounds so factual, but just like all other myths it isn’t. Yes, they’re similar but there are some major differences that might have serious consequences on your business. First and foremost, the system of consumer credit has proven both in court and congressional testimony to be quite anti-consumer. In most cases, the system does not favor consumers, is susceptible to errors, and is not open to correction from consumers or that of their advocates. (An example is when judgment was obtained against a credit bureau and they refused to clear a certain erroneous information from a consumer’s record). Business credit system on the other hand is different. It is neither anti-consumer nor anti-business, it is prone to fewer errors, and when errors eventually occur, they’re usually corrected without too much fuss.
Myth #2: There’s nothing wrong with using personal credit to replace business credit
This is a very wrong perspective that can cause a lot of problems along the line. If you use your personal credit to do business, you’ll end up risking your personal credit for your business. Using personal credit to do business can limit the amount of resources left for you both personally and in business which could end up being a disaster. What if your business credit requirements exceed the capacity of your personal credit – and what if you want to use your personal credit but you can’t because you’ve tied it up with your business. There’s no way using your personal credit for business is a good idea, regardless of how you try to spin it.
Myth #3: There’s no correlation between personal credit and business credit
Although using personal credit for business is not a great idea, there’s really no way to separate the two completely. Most times, particularly when starting a business credit, the company owner is usually required to provide some form of “personal guarantee” to get the line of credit or business credit loan. When trying to provide a personal guarantee, it is normal for the company trying to extend the credit to go through the history of your personal credit in addition to checking your business credit. Though the business account does not show up on personal credit reports, however, the personal guarantee might have an effect on your personal credit if the business ever encounters financial problems. This is why you should avoid things like that by planning carefully and using your business credit smartly.
About the Author
Jenella J. Brown is currently the CEO and a FCRA Board Certified Credit Consultant at A Good Name Credit Solutions & Tax Service, LLC. At A Good Name Credit Solutions, she specializes in raising credit scores, income taxes, tax resolutions, and helping business owners establish excellent business credit scores and then leverage those scores to access cash and credit for their businesses.
Ms. Brown is the author of the book “A Good Name Credit Solutions” which can be purchased on amazon. The book is a personal guide designed to give the reader a step-by-step process of understanding how the credit system works and how to restore their own credit. Ms. Brown is also the mastermind behind the release of the exclusive Business Funding Suite. The Business Credit and Funding Suite is the leading business cash and credit access system in the world today. For more information on building business credit, business loans, or tax issues or credit restoration; visit the website at: www.agoodnamecredit.com for a FREE consultation.