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If you are an entrepreneur and have a challenged personal credit score than you need to read this!

“Challenged Credit” is essentially credit below 680.  Entrepreneurs seeking to obtain valuable lines of credit for their businesses need a personal credit score above 680 and preferably above 700.  In fact the ideal score is above 760.  Most entrepreneurs have a personal credit score far below a 760.

 Why do so many entrepreneurs have poor credit scores?  Well, there are two reasons #1 They had a poor score before they became an entrepreneur and #2 Their scores dropped after they became an entrepreneur.

 If you are like a lot of entrepreneurs who had poor personal credit before you started your business it’s probably because you are a risk taker.  People who start businesses are taking a risk and aren’t afraid to lose everything they have.  After all that’s essentially what you are doing when starting a business.  Risk takers find themselves in tough positions from time to time and their personal credit suffers because of it.

If you are like most entrepreneurs your personal credit score dropped after you started your business.  Once you start your business the frequency of your personal credit report being pulled increases.   People offering credit, leases, merchant accounts, etc want to see that you are not a credit risk.  They need to know that you will pay your bills or not defraud anyone.  They can judge this many times by pulling your personal credit report.

Entrepreneurs are at a disadvantage right away with their personal credit score.  The system for developing their credit score is set up to measure the ability of a consumer to pay their bills on time.  The system measures individuals on averages.  For example, the average number of credit accounts opened, the average number of credit inquiries, the average credit balance, etc.  As business owners, we aren’t average with credit by any means.  Entrepreneurs shoot way above the averages and thus lower their credit scores the longer they run their businesses.  That is unless they use the number one way to improve the credit of an entrepreneur. 

The number one way to improve your personal credit is to develop business credit.  It’s that simple and yet it’s also not that simple.  If developing business credit was so easy and helped improve your score, all business owners would be doing it.  The challenge is that there is little information that is any good out there and little help.  In fact, the government who has done everything it seems to help consumers to protect their personal credit, haven’t past a single piece of legislation to protect the small business owner from their business credit, which is the reason it is not so simple. If you don’t build your business credit correctly the first time, you may never be able to fix it. 

 A great resource for business credit is www.bcscredit.com  Of course, this is one of my companies – I do feel the need to disclose that.  But I also want to say that our staff at Business Credit Services knows what they are doing.  They build business credit the right way the first time and make sure you get lines of credit under your business name separate from your personal credit.  This allows you to take credit you would have received anyway under your personal name and shift it to your business. 

 In future posts, I will write further about the process and how business credit can help you grow any business.