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socrateaser, Lawyer
Category: Tax
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Experience:  Retired (mostly)
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HI I had a question about Business Credit. I am 26 years old

Customer Question

HI I had a question about Business Credit. I am 26 years old and have Poor personal credit based on stupid decisions when I did not know better. I am now working on improving my credit. My dream is to start my own business one day. I just went back to school and should be done within 2-4 years. I was wondering you think it is a good idea to incorporate a business name so I can open up a business line of credit or credit card or whatever. Hopefully during those 2-4 years it would have built up maybe? I am hoping to qualify for a business loan. Assuming you recommend this option. Lets say I am not 100% sure of what business I am going to start. Can I incorporate a generic name but when I start my business till run the business under its a unique name for that business even though I incorporated my business under another name? thanks for your help
Submitted: 4 years ago.
Category: Tax
Expert:  socrateaser replied 4 years ago.

Incorporating a business is only useful for credit purposes if you are actually generating income. Otherwise, any creditor will require that you personally guarantee the business credit lines -- and as soon as the creditor sees that your personal credit is bad, you won't get the loan. So, unless you intend to start business operations now, there is no value to incorporation at this time.

If you want to improve your credit, the best way to do it is to simply keep paying your bills on time, because all of your bad credit entries must be deleted after seven years (except for judgments and bankruptcy filings, which must be deleted in 10 years).

Hope this helps.

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Customer: replied 4 years ago.
thank you for your answer. seems to make sense :). but what if when I incorporated, lets say I take out a small business credit card? that would be also based 100% on my personal credit? I was also wondering when i do incorporate and apply for a credit card maybe I can apply for a secured card that helps build business credit? sorry just double checking
Expert:  socrateaser replied 4 years ago.
You can try what you suggest -- however, I believe that your creditworthiness will come into play immediately, until such time as the business can show significant revenue and profits on its own.

Hope this helps.

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