Questions from you…

I frequently receive questions from my readers… so I figured if one person is asking, there may be several others who are wondering the same things.

Here are a few questions I’ve received over the course of the past week…

By the way, you can be assured I will be posting these more regularly.



What is the difference between personal and business credit?


At the point an individual with a social security number accepts their first job or applies for their first credit card, a credit profile is started with the personal credit reporting agencies. The profile (credit report) is built from there with every credit inquiry, credit application submitted, change of address and job change. The information is typically reported to the credit bureaus by those issuing credit. Eventually, the credit report becomes a statement of the individual’s ability to pay back a debt.

In some cases, the same is true for businesses. When a business issues another business credit, it is known as trade credit. Trade, or business, credit is the single largest source of lending in the world. The business, however, first obtains a Federal Identification Number or (EIN) from the IRS. The name, address, and EIN number then track the company’s credit.
Information about trade credit transactions is gathered by business credit bureaus. The credit bureaus receive their information from businesses that issue other businesses credit. Unfortunately, a large percentage of businesses issuing business credit never report their information to the bureaus. This means a business can go for years without having anything listed with the credit bureaus.

The business credit bureaus use this compiled data about your company to generate a report. Those issuing credit in many cases will rely on a business credit reports to determine if they will grant credit and how much credit to give.


How can I build business credit?


  1. The number one rule in building business credit: pay your bills on time.
  2. Owners or principals of a business need to look after their own personal finances.
  3. Keep good financial records and have a solid accounting system that not only tracks accounts payable and accounts receivable, but is also capable of making forecasts and projections about financing and cash flow problems before they arise.
  4. Create a business credit track record.

Building business credit is a process that will evolve over a period of time. Just staying in business past the first two years will improve your business credit outlook. So too will keeping your suppliers happy and ensuring that your financial recording systems are accurate and up to date. The longer that you pay your bills on time the greater your business credit will grow. Look after the small things in your business and building your business line of credit will look after itself.


Is it possible to start-up a business based on inventory abundance?


Zapper Credit Solutions’ Answer: Yes, You definitely can get creative in this particular situation. Inventory is collateral to a lot of lending institutions; there are companies that provide inventory-based lines of credit.

In today’s business market you can create a start-up based on just about anything that pops into your head. The good news is that millions of Americans achieve that goal every year. The bad news is that many more can’t make that happen because they don’t have their own capital or the credit to be able to get a business start up loan.

Entrepreneurs must separate their personal and business life. They need to in order to be seen as a typical consumer for credit purposes, so they aren’t turned down for a mortgage or car loan just because their credit score is low from business activity.


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