Today we have grown to a nation in search of instant gratification, buy now pay later syndrome. So, without a good credit rating it will be very difficult to get the things you want at the time you want them. Consumer credit has been accepted as a substitute for cash, so that good credit is the key to the future.
As a consumer it is to your benefit to fully understand how credit works and every aspect of what is involved when you apply for any type of credit, including the major credit reporting agencies that hold your credit report file. If you understand what banks and other creditors are looking for to extend credit to you then you can monitor your financial future and accept only the best choice.
When you apply for credit, lenders want to know about you, your employment history, your income, your assets, and most importantly they want to know about your credit history. A creditor will get a lot of information directly from you by a credit application, then your credit bureau report to verify this information and confirm references and credit scores.
Then upon evaluation of your credit application combined with your credit report, the lender will determine your credit risk and make a final decision on whether or not to grant you credit and at what rate of interest they will charge you. Let's take a deeper insight into the factors that can either be an asset or liability at the time of the application for credit - your credit report.
What is a credit report? Your credit report is your financial resume, a summary of your financial reliability, containing both personal and credit information. Your credit report is obtained from credit bureaus, also credit providers, employers, insurers, landlords and other enterprises that have a legitimate need for such information. The Federal Fair Credit Reporting Act (FCRA) is recommended read.
Rick Sax, Inc.
The Credit Repair Law Firm, Chartered
It is essential that a business owner separate his personal and business banking. This is critical in running a successful business.
One of the major financial tools used to accomplish this is a business bank account.
A business bank account helps maintain accurate records, prepare reports, make deposits, withdrawals, wire transfers, issue checks, and much more.
One main benefit of business bank accounts is that you can easily delegate responsibilities such as making deposits because it’s easy to add on other people to the account.
You can also accept debit and credit cards as with a business account you’ll have a place for the merchant processor to deposit funds, making it easy for you to accept more types of payments and get more sales.
Plus, business accounts have more lenient fees, such as fees being waved when you use online banking. And your business banking relationship can also help you secure bank loans.
Contact us today to get money and credit to grow your business.
Setting up a business bank account is one of the first things any business should do. Here’s the actual order of setting up a new business:
It’s essential you setup your business bank account quickly because many lenders and credit issuers see your bank account setup date as the date your company really opened, its start date.
They used to look at your entity inception date, but due to so many “fake” company setups such as shelf corporations, now your bank account is what’s used for your business inception date in many cases.
It’s easy to setup a business bank account, even if you’ve defaulted on personal bank accounts before and are in ChexSystems.
If you owe debt to the IRS or other entities, they CANNOT take funds from your business bank account.
You will be asked for several items when setting up your new account.
You must setup your bank account the right way to insure it’s easy for you to get credit and loans in the future. Your company name needs to match your entity paperwork.
Your company address also needs to be the same. Make sure your EIN number is also the same on your bank account as it is on your EIN paperwork.
It’ll take about 30 minutes to setup your business bank account. Most banks will require you go into the bank to get your new account setup.
When you leave they’ll give you a folder with documents that outline the terms on your bank account and info to setup online banking. You’ll also leave with temporary checks for the account.
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Every bank has a service they’ll recommend to get checks for your business bank account.
On your first order, they might try to charge you $150+ but BE CAREFUL as you won’t need all that they “package” in with your checks.
Usually on your first order they’ll give you a starter kit with a binder, deposit bag, company stamp/seal for endorsements, and other perks.
You do NOT need all of this and can order most of it online much cheaper anyways. Also watch out for the amount of checks they’re giving you, and start with as few as you can, you might not want or need 250 or more to start.
Not only should you not pay these absorbent fees for the checks, but you can also skirt past most bank fees by finding a free or nearly free business checking account.
Contact us today to get money and credit to grow your business.
Whether a business owner decides to open an account at a national, regional, or local bank, credit union, or community bank, they should select a bank that can best cater to the needs of their business.
While every bank offers various types of financial business products, each serving a specific need, one thing remains the same throughout: bank credit.
Bank credit is the total amount of borrowing capacity a business can obtain from the banking system. This is not the same as business credit, which is a much broader category of lenders such as suppliers, credit card issuers, or leasing companies.
A business can secure more business credit quickly as long as it has a minimum of one bank reference and an average daily account balance of at least $10,000 for the past three months. This yields a “Bank Rating” of Low-5 (meaning an ADB of $5,000 to $30,000).
A lower rating, say a High-4, or balance of $7,000 to $9,999 won’t put a stop to the business’s application, but it will slow down the approval process.
This rating is the average minimum balance maintained in the business bank account over a three (3) month period. A $10,000 balance will rate as “Low 5″, $5,000 rates as “Mid 4″, $999 rates as “High 3″ and so on.
The main goal should be to maintain a minimum “Low 5” bank rating ($10,000) for at least 3 months. Unfortunately, without at least a “low 5″ rating, most banks will assume the business has little ability to repay a loan or a line of credit.
Contact us today to get money and credit to grow your business.
You can look but you’ll struggle to find good information about your secret bank credit score. What you should know is that ALL banks do score your business and give you a Bank Rating, i.e. your bank credit score.
Here’s a quick breakdown of your bank credit score:
Business owners should do whatever they can to keep at least $10,000 in their account over a 90-day period.
The money should be kept there just to ensure the bank rating is high enough to increase future financing approvals.
Each cycle is based on the balance rating during the previous three months period.
So before a business decides to apply for credit, it should keep a balance rating of “Low 5” for the past three months.
Contact us today to get money and credit to grow your business.
It is essential that a business manages its bank account responsibly.
This means the business should avoid writing non-sufficient funds (NSF) checks at all costs as it destroys bank ratings.
Non-sufficient funds checks are something no business can let happen.
It’s even a good idea for the business to add overdraft protection to their bank account as soon as possible to avoid NSFs.
It is also very important for a business to show a positive cash flow. The cash coming in and going out of a company’s bank account should reflect a positive free cash flow.
Positive free cash flow is the amount of revenue left over after the company has paid all its expenses. When the account shows a positive cash flow it indicates that the business is generating more revenue than is used to run the company.
It’s important to also recognize that banks are motivated to lend to a business that has consistent deposits. A business owner must also make regular deposits to maintain a positive bank rating. It is vital that a business owner make a lot of consistent deposits, more than the withdrawals they are making, to have a good bank rating.
Bank credit is not only based on monthly deposits, balance rating, and check history, but also includes: the age of the account, the bank products the business uses, and any savings account or investments the business has.
A seasoned bank account shows stability and longevity in the eyes of the lenders. Keeping a healthy and long standing relationship with a bank is also crucial for all companies. A good, stable relationship with a bank that reflects longevity will be highly appreciated by lenders considering lending that business money.
Your bank rating will be higher the more bank programs you use, maintain, and pay as agreed. Having investment and savings accounts help your bank ratings. Having open loans, even open CDs help your bank rating.
Take advantage of and use other services your bank offers such as CDs, savings accounts, and other investment accounts. Open your bank account when your corporation starts, and leave it open as this longevity will help your bank rating.
Make consistent deposits on a regular basis. And insure each month you have good cash flow through your account by regularly putting into the account more money than you take out.
Taking these steps will insure you have an exceptional bank rating. An exceptional bank rating means your business will have a great chance of being approved for bank financing including loans, credit lines, and credit cards.
Contact us today to get money and credit to grow your business.
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