I have this perpetual battle with some of my students who don't quite "get" how important both personal and business credit is in this day and age...
Yet they wonder why a bank won't finance them to buy a stick of gum because they have a 425 personal FICO score.
And it actually shocks and amazes them.
But think of it in terms of this:
If you were a bank and someone wanted money for, say, a $10 million apartment complex and yet they had no assets, no personal credit, no business credit, and can barely "vouch" for the fact that they're an American citizen (if they can even do that)...would you give up the money?
I didn't think so.
Remember the giant credit debacle of the 21st century? Remember when lenders were giving home loans with 100% LTVs (and even over 100% LTVs) to people who had "stated" income...meaning they simply "stated" what they made and they were financed?
And remember where that got us, right?
Yes, exactly right. Foreclosure-ville-galore!
And the banks don't want a replay of that. At least not quite yet. At least until they've forgotten about the 21st century lending debacle, that is.
So, in the meantime, it all boils down to credit.
I've been working diligently on my credit since I filed bankruptcy back in 2003. I've fought with creditors, even sued a couple. I've chiseled all the bad marks off my credit reports, even having hard inquiries removed.
Fixing and rebuilding personal credit came first. My personal credit was so bad that I had to get secured credit cards in order to start building credit. Between those and getting a car loan, I was on a fast rebuilding track for my personal FICO score. Within a year I dramatically increased my FICO just by doing those 2 things.
Once I got my FICO above 720, a whole new credit world opened up for me but...
It wasn't about personal credit.
I now have excellent credit. In fact, I have a banker by the name of Britney who calls me literally every other day to give me business loans. She called me yesterday (for the 3rd time this week) when I was standing in the middle of Universal Studioswondering what the "status" was of my considering her latest loan offer...which was somewhere in the neighborhood of $250,000.
I told her to call me back on Monday. I don't need the money. But maybe I can use it for something to keep building my credit. Or I'll just borrow the money, stuff it into a bank account, and then pay off the loan in 6 months to beef up my Experian Business FICO score.
One of the biggest changes with business credit is DNB vs. Experian Business. I've noticed a huge change in how to build business credit over the past couple of years. Building business credit used to be an endless chore that would be equivalent to holding down a part-time job just to keep up on it since DNB (Dun & Bradstreet) requires you to build (and maintain) your own credit profile.
And that sucks.
Plus they have limitations on which types of creditors you can have.
That sucks even worse!
Then Experian Business came along.
And it's freakin' seamless to work with.
For example, you have a Social Security number. You apply for a personal credit card and the bank uses your SS# to tie you to your credit profile. When you use the credit card, all of your activity is reported to your Experian, Equifax, and Transunion credit reports via your SS#. This happens automatically.
Experian Business works much the same as the above scenario except using your company's EIN (employer's identification number) to tie your business into its own credit profile. Therefore, any business credit card you use with the EIN attached will automatically be reported to your Experian Business credit report.
Automatically without you doing a damn thing except for using and paying your business credit card.
Told you...freakin' awesome!
So, why tinker around with DNB -- building profiles, fighting with a customer service rep over which accounts you can add to your profile, arguing with them over your tax returns -- when you can have Experian Business build credit for you? Just by using a business credit card??
DNB has its place in the food chain. But it's not really something you concern yourself with until you start needing higher dollar amounts such as $500,000+. Then you need to have some type of built up DNB credit.
Until then...you build business credit the easy way!
I have a 4-month Personal & Credit Mentorship Group starting on Wednesday, August 7th. It's my last group for the year.
This group will show you, step-by-step, how to fix and rebuild your personal credit while building business credit at the very same time.
And yes, you can still do this if you don't have a business that has "gross receipts" or tax returns. You can do this if your business is brand new!
In my next entry, I'm going to tell you how my newer company gained access to over $300,000 in unsecured business credit while my older company didn't...and why. (It'll actually surprise you! What'll surprise you more is how easy and quick it was for me to build up so much business credit with my new company in less than a year!)
See you at the top!