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You will have this question in your mind if you have bad personal credit rating. The fact is there are lenders who concentrate in giving business loan for a poor rating individual. What will be the consequences? And, how is it to get credit in a better way?

There are two conditions that lenders will ask from you for obtaining business credit with poor personal credit rating. First, high rate and second is heavy collateral. When the owner’s of business have a better profile of credit history, lenders will tend to be flexible with collateral because the possibility of default or failure in payment is low. The high rate is also to compensate the possibility of default of poor rated borrowers.

If your company has no assets to be pledged in the certain value lenders required, or if you think you can not do business in such a high rate they want, you need to learn how to build a business rating. It takes time until you have a good rating, but there is always time to start good thing in business.

In the corporate credit concepts, business credit is separated from personal credit. You need to have your business incorporated, get tax ID and business identification number. This is the first step to build a corporate credit rating. When your personal rating is poor, the only thing you have is business credit rating.

With a good credit relation with your vendors, good record on corporate credit card your business will be rated higher by credit bureaus you are listed in. Once you have good corporate rating you can obtain corporate credit, apply for business credit line for example, as an extension of your checking account.

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Most businesses have to depend on business credit accounts some time or another in their existence. It will most likely be a case of not if yours will need to do so, but when will it happen? Because of that, here are some survival tips on business credit accounts:

Tip #1: Credit reports on small business may not be apart from individual credit report scores.
Have you thought that credit reports on businesses and their owners are separate? While that may be true, it also may not. It depends on the credit bureau doing the reports. Some, such as D&B and Credit.net, for instance, don’t keep data on individuals’ personal credit histories, but, agencies like Experian and Equifax sometimes mix the two together and give you a combined score.

While you may have seen advertising stating a good business credit file can help improve your personal credit history, think again. It’s vital to keep both of them in the best possible shape. Nowadays, this is very true because the business market is very competitive and one false move can destroy you. There are even some established businesses that have to supplement their credit histories with those of their owners so they can get loans or credit accounts. That means owners of small businesses better watch out and be sure to protect their own, as well as, their business credit ratings.

Tip #2: Paydex Score is not the only scoring method.
You may know that credit lenders for business accounts usually use the Paydex Score offered by D&B. However, others don’t use it, instead employing credit reports and scores offered through Experian, Equifax, the Small Business Exchange, and other agencies. Some even limit their reports to one place. Find out what your card holder does so you know where you stand.

Tip #3: Even if you pay your accounts on time, you still may not be promised business credit.
The story was that one company tried to get a loan that had a large business and more than 20 employees. But, they didn’t take the time to develop a good credit file, so they weren’t able to get the loan they needed. Learn from their mistake by doing things to keep your profile in shape. Be sure to borrow or buy things from places that report your payments to the major credit reporting agencies. If not, you won’t have a history and it will be for nothing. You should also make sure there is a listing for your company’s financial information. Banks need this when you ask for a loan. Having a good business plan doesn’t hurt either.

Tip #4: Get things right the first time!
Credit reports for a business don’t share in being covered by federal laws like personal ones do. You have to make sure the data goes in right the first time, because unlike the personal reports, you can’t dispute the entries. Start now to make sure all is in place.

Even a business that may not make money for a time needs to be sure to have everything in place and ready to go for when it needs cash. If you take all the basic steps, have the proper business setup, correct licenses, good advertising program and a decent business plan, you have a better chance to get the credit accounts you need or desire. Be ready and keep these things straight and your business will soar.

FICO score is the formula used to measure borrowers’ credit worthiness. It is a score that gives a clue on question if she or he will be able to pay back or defaulted. Borrowers with a higher FICO score enjoys favorable rate and flexible term and condition due to they have lower risk.

What are the five factors that affecting your score?

Payment History
Weighted: 35%. This factor follows the basic rule in borrowing money: “Pay your debt promptly”. A late payment will indicate a problem in cash flow, not just technical reason such as forgot, or did not have time to arrange the payment. Late payments can significantly lower borrower’s score. The longer the delay of payment, the bigger the negative effect to your credit scores will be.

Including in payment history is public record for payment. Public record is a record for bankruptcy or collection. The record in your credit history for bankruptcies will remain for seven years.

Amount of Outstanding Debt
Weighted:30%. The higher limit of credit used for credit card, the worse the score will be. If you have more than one credit card and overall your balance is 30% of total limit, make sure that there is no single credit card has high usage. The score will be calculated based on single credit card balance as well as overall.

These two first factors constitute for total 65% weighted affecting your score. They could have bad effect to your score as well as a good boosting factor to fix credit. If you have bad payment record and use 90% of your credit card limit, it is like you wear printed t-shirts saying “Don’t owe me anything”. The rest three factors are length of credit history of (15%), new credit (10%) and diversity of credit line (10%)

This post written by Phillip Thow