Free Navigator Credit Cards For Establishing Strong Business Credit Profiles
Typically, business credit accounts are made by non-traditional credit agencies such as banks when traditional credit grants are applied for. These accounts may be reviewed during the strategic decision making phase of whether or not to provide credit to an organization. Such credit decisions include the approval of an enterprise credit facility or arrangement, an acquisition of lines of credit, or the renewal of an existing business credit facility.
There are many small business credit terms that must be understood in order to determine the best financing option available. One such term is the Accounts Receivable Aging Ratio. It’s often referred to as AR Ratio, and is one of the most important factors used to evaluate the cost effectiveness of a financing option. Other terms that should be familiar to business owners financing decisions include Credit Desk Ratio, or CDR, and Business Credit Repair Rate, or CRR. These three terms are among the most commonly used business credit metrics in use today.
As previously mentioned, there are many business credit cards in operation today. These cards are very similar to the standard MasterCard or Visa used for personal financing. They are issued in either cash or electronic form. The biggest difference between these business credit cards and traditional financing is that business credit cards do not establish credit, they simply facilitate business purchases with pre-authorization from the business owner. These pre-authorizations can come in the form of invoices, contracts, or bills.
To establish business credit cards, businesses must have good, or near good, credit history. This history is reported to credit reporting agencies such as Equifax, Experian, and TransUnion. Businesses need to dispute incorrect information on their credit profiles with credit card companies. This helps improve their credit scores. In addition to having an accurate profile, businesses must make all regular payments on time, in full, in order to keep their business credit profiles updated.
Another way that businesses establish business credit is to form a separate legal entity. When businesses form a separate legal entity, the business is able to obtain funding in this separate legal entity. This separation allows business owners to get loans and lines of credit under separate legal entity. The separate legal entity also makes it easier to determine who profits and losses in the business and therefore allows business owners to have separate tax returns.
If a business forms several legal entities, it is easier to obtain financing because each entity is responsible for making its own payments. However, some lenders limit the amount of funding they are willing to loan. For example, when a small business forms several legal entities, each entity is responsible for making its own payment to secure better interest rates on the financing. Lenders want to know that the business has a good mix of assets and income when determining a lending program.
Many business owners avoid borrowing money or doing anything that will require them to borrow money in order to maintain their business credit profiles. When a business owner knows that they will be required to make a big payment in order to maintain their business credit profile, they often choose to avoid borrowing money. Instead, they decide to increase their turnover rate, take a vacation, or save for a rainy day. When a business owner knows that they may have to borrow money at some point, they choose activities that minimize the possibility of them having to borrow money.
Some lenders offer businesses a free credit card for a limited time period. Lenders sometimes offer business owners a free credit card when they register for an account with them. When a business registers for an account with a lender, it takes the form of a credit card application. When a business applies for a free credit card, many lenders send a credit card representative to evaluate the business’s credit profile.