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Three Business Credit Myths Debunked
A lot of people don’t understand the consumer credit system. And many more
don’t understand the business credit system. Today I’ll cover some common
business credit myths and explain what can be learned from them.
Myth #1: Business Credit is Just Like Personal Credit
This sounds like it ought to be true, but it isn’t.
Sure, the credit systems are similar. But there are
some major differences that can seriously affect
your business. For starters, the consumer credit
system has, both in court and in congressional
testimony, been shown to be fairly anti-consumer.
The system works against consumers in often. It is
prone to errors and tends to resist the correction of
any errors by consumers or their advocates. In one example, even after a credit
bureau lost in court, they continued to refuse for months to remove incorrect
information from the person’s credit reports. The business credit system is
different. It is not anti-business (or anti-consumer) and is less prone to errors.
And when there are legitimate errors, it tends to be easier to correct them.
Myth #2: It Doesn’t Hurt to Use Personal Credit in Place of Business Credit
This is a problematic way of thinking that can lead to big problems down the
road. Using personal credit for business purposes puts your personal credit atrisk for the sake of your business. By doing so, you limit the resources available
to you personally and to your business. The end result could be disastrous.
Imagine when your business credit needs exceed your personal credit capacity.
And then you need to use your personal credit and can’t because it’s tied up by
your business. No matter how you spin it, in the end using your personal credit
for business is a bad idea.
Myth #3: Business Credit and Personal Credit Are Not Related
Using your personal credit for business use is a bad idea. But we can’t 100%
separate business credit and personal credit. Often, especially when starting out
with business credit, a company owner must provide a personal guarantee for
the business credit loan or line of credit. When providing a personal guarantee,
the company extending credit will not only check your business credit. They will
check your personal credit history. While the business account won’t show up
on your personal credit report, the personal guarantee could eventually affect
your personal credit if the business fails to meet its obligations. Aim to avoid
that scenario (and you can) with careful planning and smart use of business
credit.
About the Author:
Brian J. Small is currently the CEO of TB HUB LLC, he specializes in helping business owners establish excellent business credit scores and then leverage those scores to access cash and credit for their businesses. Brian J. Small 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 business credit scoring, business credit, visit tbfinancialhub.com or contact them at 800-259-5858 for your consultation.