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How to Build Business Credit with Bad Personal Credit

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Having bad personal credit, admittedly, doesn’t make it easy to build business credit. But it can certainly be done with the right approach.


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Here are some specific strategies on how to build business credit with bad personal credit to make yourself a more attractive borrower.

Establish Your EIN

A good starting point is to establish an Employee Identification Number (EIN).

This is a nine-digit number that’s assigned by the IRS to businesses operating within the United States and the US Territories.

An EIN is used for multiple purposes, including “filing company tax returns, opening a business bank account, applying for licenses and permits, and applying for business credit,” the Small Business Administration explains.

It’s helpful to have an EIN because it gives you another means of attaining business credit lines, and you can open a business bank account with it rather than using your personal information.

An EIN kills two birds with one stone because it will help get your small business off the ground and also serves as a workaround for bad credit.

So if you haven’t established one yet, now is the perfect time to do so. You can find all the information you need for applying for an EIN here.

Register with Dun & Bradstreet

While the three major credit bureaus for reporting personal credit information are Equifax, Experian, and TransUnion, it’s a little different for business credit.

Information is still reported to Equifax and Experian. But, instead of TransUnion, the other main credit bureau it’s reported to is Dun & Bradstreet, among others.

Another critical part of establishing business credit is registering with Dun & Bradstreet where you apply for a Data Universal Number System (DUNS) number.

It’s free and easy to do and can be done via the Dun & Bradstreet website here.

Simply complete the four basic steps, and after your information is validated, you’ll receive your nine-digit DUNS Number.

Once you have it, lenders and credit agencies will use it to verify your legal status as a small business owner from the Dun & Bradstreet Database and assess your credit profile.

This, along with setting up a business bank account, is integral to “legitimizing” your business. It also should unlock opportunities for partnering with other companies and put you on your way to building business credit.

In turn, it should increase your odds of being approved for a small business loan, business line, credit line, and other forms of business financing. This brings us to our next point.

Apply for Tradelines with Your Vendors

Tradelines can be helpful to most small business owners. But they can be especially helpful for newer business owners who are just getting started and need to get some credit under their belt.

Even with bad credit, vendor tradelines should be a feasible way to start generating some trade credit, which can get you moving in the right direction.

With vendor tradelines, you set up an account with a vendor that has payment terms where invoices must be paid by an agreed-upon time frame.

Under net-30 terms, for example, you have 30 days to pay the invoice. With net-45 terms, you have 45 days to pay. With net-60 terms, you have 60 days to pay, and so on.

As long as you pay on time and the vendor reports it to a business credit bureau, it should start alleviating your bad credit and boost your business credit score.

And as you get in the habit of consistently making prompt payments, your business credit should keep growing, eventually helping you overcome your poor credit history.

Just be sure that the vendor reports payments to the business bureaus — ideally, choosing those with short payment terms, as this will help you build credit faster.

Apply for a Business Credit Card

One of the primary factors for determining business credit is payment history. In fact, most experts agree that this carries the most amount of weight overall.

Besides paying your vendor tradelines on time, another good way to build credit quickly is by applying for a business credit card and using it responsibly, not merely making your payments on time but ahead of time.

Also, just like with a personal credit score, credit utilization comes into play here, meaning you’ll want to keep your credit card usage low.

The combination of prompt payments and low credit utilization can quickly build good business credit and counteract a bad personal credit score.

Just note that you may have to opt for a secured business credit card initially if you don’t qualify for an unsecured credit card.

Make sure that your secured business credit cards report to the business credit bureaus and not to the personal credit bureaus. There aren’t very many secured business credit cards that report to the business credit bureaus, so this is worth calling out.

When you’re just starting out, you may also need a personal guarantee or have a higher interest rate than you may like from a lender.

But once your business credit improves, your options should increase and you may be able to obtain a better credit card with better terms and conditions.

Pay Your Business Bills on Time

Again, payment history is the single most important factor for determining your business credit score.

Just as it’s critical to pay a vendor trade line, business loan, and business credit card bills on time, you should get in the habit of paying all your business bills on time.

And whenever possible, go the extra mile and pay them off in advance so you’re always ahead of the game.

Establishing strong business credit is all about creating a virtuous cycle of good credit.

Staying on top of bills helps you avoid falling into debt and being delinquent on payments. This, in turn, should make you a more attractive borrower to lenders which should help you negotiate better business loan terms and repayment options.

In time, this can help you achieve a good business credit score and may even give you access to the best business credit cards.

While it can be tough at first when you’re trying to work your way through bad personal credit and generate cash flow, it should get easier in time.

Monitor Your Business Credit Reports Regularly

Just as it’s important to routinely monitor your personal credit, it’s the same with your business credit score.

That’s why you should get in the habit of regularly monitoring your business credit report so you know what’s happening with each major credit agency.

Doing so has two key advantages.

First, it will give you a baseline assessment of how you’re doing with your business credit and what your overall trajectory is.

While you won’t likely be in an ideal position initially because of your bad personal credit, your trajectory should hopefully improve over time, and you’ll know exactly where you stand.

Second, you should be able to identify any incorrect information and catch errors.

Although each major credit reporting agency does a pretty good job at credit reporting, mistakes do occasionally happen.

If there’s an issue, staying on top of your business credit report should ensure you quickly find it so you can dispute an error before it damages your business credit score.

It’s just a matter of contacting the credit bureau that made the mistake via a formal letter.

Keep Working on Your Personal Credit

Even though you may have poor personal credit right now, it doesn’t mean it has to stay that way long-term.

Your credit — both personal and business — is constantly fluctuating, and it’s never too late to right the ship.

This starts with first understanding which factors contribute to your personal credit score, which, according to FICO, are:

  • Payment history – 35%
  • Amounts owed – 30%
  • Credit history length – 15%
  • Credit mix – 10%
  • New credit – 10%

The other part of the equation is following fundamental best practices, such as:

  • Consistently making payments on time or ahead of time
  • Keeping your credit utilization ratio no higher than 30%
  • Diversifying your credit
  • Not closing out credit card accounts (this adds to your credit history length and lowers your credit utilization ratio
  • Not applying for too many new accounts at once (this can be a red flag to lenders)

I spoke with Forrest McCall, a personal finance expert and founder of Don’t Work Another Day, who emphasized a more personal approach to building credit, “When it comes to managing your personal credit, it’s all about comparing yourself to where you were a few months ago, instead of comparing yourself to others.”

McCall recommends keeping tabs on your credit over time and making small changes to how you manage your money so you can start seeing your score climb.

You may also want to consider applying for a credit limit increase on a business credit card as you become a more trustworthy borrower because this too should lower your credit utilization ratio.

That way, you should be able to steadily improve your personal credit score while simultaneously establishing good business credit for a win-win.

Closing Thoughts

Building credit as a business owner with bad personal credit can certainly be challenging. But it’s by no means an insurmountable obstacle.

Even with poor personal finance, knowing what to prioritize and having a clear-cut strategy should help you quickly build business credit and set the tone for creating a thriving company.

The post How to Build Business Credit with Bad Personal Credit appeared first on Due.

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10 Things Every Working Woman Should Do This Year

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Opinions expressed by Entrepreneur contributors are their own.

Self-care has become an all-encompassing term that has strayed from the importance of everyday commodities that keep us in good health and spirits. Though pampering and “treat yourself” moments still have value, here are ten ways to invest in yourself to produce long-lasting, positive results.

Related: 8 Self-Care Tips From Wildly Successful Entrepreneurs

1. Put money into a 401(k)

It’s never too early (or too late!) to start saving for the future. Depending on your employment status, there are different retirement savings accounts. 401(k)s are the most common since these are employer-sponsored and often come with an employer match. However, freelancers also have options, such as a SEP-IRA or a high-yield savings account, to put away extra, tax-free dollars for retirement.

2. Schedule a health checkup

Self-care first includes taking care of your physical health. It’s easy to discredit regular checkups when you’re feeling healthy, but make this the year to get your blood work done. It creates a baseline for your health to identify areas needing improvement or extra attention.

Also, choose areas in your life where you can make small changes. Improving your health doesn’t always mean a drastic overhaul; it may be as simple as drinking more water or adding an extra 30 minutes of exercise to your day.

Related: 3 Key Tips for Optimizing Your Physical Health as an Entrepreneur

3. Review health insurance benefits

Many people with health insurance aren’t sure exactly what it does and doesn’t cover. If you’re unsure, talk with your HR representative or your health insurance provider to get an overview of deductibles, co-payments and other supplemental benefits you may not be aware of. Then, decide if the health care plan makes sense for your current lifestyle.

Are you paying for benefits you don’t use, or do you need additional benefits that aren’t covered? Selecting the right plan will help ensure you have what you need without paying the extra expense for anything you don’t.

4. Ignite your curiosity

Maintaining healthy cognitive functions through new pursuits gives a boost to the brain. Get curious and find what speaks to you. This can be anything from exploring local museums, embarking on different hiking trails, learning a new language or reading more books.

There’s no limit to what you can do, and these activities can ignite more creativity and motivation in your work. While it may be helpful to look to others for inspiration, make them enjoyable so you’ll want to make them a regular occurrence.

5. Prioritize mental health

Mental health has been at the forefront of people’s lives over the past few years, as many have experienced burnout. We often equate productivity with a value that drives us to go beyond our means and leads to anxiety, stress and depression. Take note of your everyday stressors and see how to reduce or eliminate them. Then, replace them with relaxing outlets that allow you to recharge.

There are various ways to prioritize mental health, from practicing positive self-talk to meditation to scheduling an electronics-free day. You may have to try different solutions before you find one that fits.

Related: 5 Ways to Protect Your Mental Health as an Entrepreneur

6. Implement good sleep habits

Consistent sleep is one of the essential factors of good health but one that is often overlooked. For many, it can be challenging to wind down from the workday. Therefore, you must “train” your body to prepare for sleep by getting into a nighttime routine.

Create a sanctuary for yourself to improve your sleep habits. Enjoy a soothing cup of herbal tea, perform a skincare routine, and snuggle in with a good book rather than scrolling through your phone. Additionally, ensure your bedroom is dark and cool for ideal sleep comfort and turn on soothing sounds if it helps lull you to sleep.

7. Try something new

What have you wanted to try but have always held back? Maybe it’s public speaking or contributing to a blog. Whatever “new” has been on your to-do, make a plan, schedule it on your calendar and go for it. It’s common to hold back from these activities due to fear of the unknown or failure, but trying new things helps create confidence and can be the catalyst you need to push you to the next level.

8. Learn to set boundaries

Boundary setting is crucial to relationships yet can be difficult to master. It doesn’t always involve simply saying no to people’s requests. Instead, it requires protecting your own values when people violate them. Setting boundaries may mean spending less time with certain people, removing yourself from toxic situations, or declining invites to events that don’t improve your life. Explore areas where boundaries will help you grow, and keep in mind growth itself is a work in progress.

Related: How to Set Boundaries to Build Thriving Relationships

9. Spend quality time alone

Learning how to enjoy time spent alone is a valuable gift. We are inundated by a false sense of connection through the internet, which often makes us feel lonelier than ever. Then, we overschedule our calendars to make up for human connections, only to feel drained afterward. Slow it down and plan a few solo dates a month to see how it feels to be truly present with yourself.

For those who aren’t used to spending quality time alone, it can feel awkward and uncomfortable initially, but these stem from your own perceptions. Take in a matinee, sit in a coffee shop and read, or enjoy a concert or event you’ve wanted to attend. Alone time has been linked to improved stress management and greater life satisfaction, so it’s worth trying to give yourself more time.

Related: Turns Out, Those Who Like Being Alone Can Be More Creative

10. Get active

Getting active can take on several directions. It can be physical, emotional or spiritual. The point is to engage with people and pursuits that feed your soul. Whether volunteering within your community, setting yourself an exercise goal, or learning more about personal development, there are endless ways to get active and invest in yourself this year.

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Are You a Winner? How to Truly Define Winning in Your Business

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Businesses gauge their performance typically with dozens of goals and metrics. But you can’t do everything at once. The challenge is to get people focused on the one thing that’s most important right now. If it moved in the right direction, it would eliminate a weakness (or capitalize on an opportunity) and improve financial outcomes. You improve that, and you win.

However, not every company clearly defines winning. A catalog of goals can pull the organization in multiple directions and stretch finite resources. Numerous goals can inherently be at odds, working against each other and for conflicting purposes. For example, a cost reduction goal might undermine an innovation goal requiring a significant investment.

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Gen Z Is Making Ugg Boots Fashionable Again: Report

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Ugg boots, the furry, sheepskin boots that defined the 2000s are back, apparently, with spiking interest and Gen Z cachet, according to data from shopping website, Lyst.

The site’s annual quarterly report that highlights the “hottest” 20 fashion brands was released on Thursday, and, as Insider noted, Ugg is on it for the first time since the index began in 2017.

“Gen Z shoppers are breathing new life into once dormant brands … with over 1.2 billion mentions on TikTok — Ugg’s influence is undeniable,” the report notes.

The boots were also sold out of stores during the holidays, it added.

Generation Z, or people born between 1997 and 2012, has demonstrated a penchant for bringing back old technology and trends, from flip phones to “vintage” headphones with cords.

But Ugg boots go back much further — the word “ugg” is actually a general term in Australia that means boots made from sheepskin and fleece, according to the BBC.

The company that created the “UGG” boot, Deckers Outdoor Corporation, is based in the U.S. and has tried and failed to trademark the word in Australia (where a court decided it was a generic word and thus could not be trademarked), the outlet added.

The company says the boots began to gain popularity in California in the 1980s. They were first featured on Oprah’s Favorite Things in 2000 (a huge brand-maker back then) and became “cherished commodities” early in the decade, according to Vogue.

The boots later gained prominence again with a fashion movement that prioritized “ugly” clothes, and have since become an unironic Gen Z favorite, per Insider. Kylie Jenner was also spotted wearing them in November.

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