Business Credit Tips

My journey into the world of starting and maintaining business and corporate credit.

Archive for the ‘Business Line of Credit’ Category

Some corporate credit companies are scams

Posted by Jeff Miller on August 20, 2008

They are in the business of collecting setup fees rather than helping you establish corporate credit.

One of my friends found one of these. They collected $5000 for each of two people that my friend was working with to establish corporate credit and it’s been over a month with nothing happening except occasional “we’re working on it” messages. That’s $10,000 down the drain.

One thing that he did not do is check references of people who have established business credit through that company.

I won’t publish their name here since I don’t want to get sued but if anyone asks about a specific company, I’ll let you know if I’ve heard of them and if I recommend them. If I’ve heard of them but don’t recommend them, you have your answer (unless I give a specific reason why I don’t).

Unfortunately, it is very hard to tell the good companies from the scams since the scams try very hard to sound like the good companies. So, always check references.

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What are the steps involved in setting up Business Lines of Credit?

Posted by Jeff Miller on August 5, 2008

While every case will be different, there are several broad categories if things that must be done to get business lines of credit.  I’ll outline those categories here and go into detail in further posts.

You need a CFO with a 720+ FICO score.

You need to start or buy a corporation of LLC.  You save a little bit of time if you buy but not as much as you could two years ago.

You need to acquire and use several small sources of business credit (credit cards, merchant accounts, etc.) and use them. In this step, you can acquire $50k – $300k in various small lines of credit (cash and trade credit).

You must show activity in the corporations bank accounts.

Once the corporation is 2 years old, showing activity and using your current business credit to raise your Paydex score to 80, you can start looking for the larger business lines of credit.

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Who needs the credit score?

Posted by Jeff Miller on August 4, 2008

For business lines of credit, the key position seems to be the CFO. All of the lenders look at the CFO and the CFO has to sign for any credit (though after 18-24 months the CFO can usually be taken off).

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The Magic Number for Business Lines of Credit is 720 FICO

Posted by Jeff Miller on August 2, 2008

I’ve been talking to several companies who broker Business Lines of Credit. They all say that the minimum FICO for starting a business line of credit is 720. They all say that higher is better but they can’t get someone started if they have a lower FICO.

One company can start with someone at 680 but I suspect that they are creating personal lines of credit to build you up to a business line of credit. This isn’t a bad thing but it does add to the time it’ll take to reach your goal.

So, starting at 720 (or upon reaching it), they will start or buy a corporation. From there they will build up your Paydex through multiple small lines of business credit. Once the Paydex is built up, you are all set for the larger business lines of credit.

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