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    2 Replies Latest reply on Aug 1, 2010 12:22 PM by FinanceOne

    Credit

    arborist Newbie
      Ive owned a tree service for about 3 months now and I a doing great. My credit is very poor and wanted the truth about building credit under my business and not have to use my ssn . I am getting so much work i need some bigger equipment. I would not mind if it takes a while (year) to build the credit so i can make sure if i was to purchase new stuff I could pay for it. THANKS
        • Re: credit
          LUCKIEST Guide
          credit, Welcome

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          Go to Members page and share some info
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          • Re: credit
            FinanceOne Wayfarer
            Arborist, in today's credit world personal credit will almost always be reviewed as well as business credit. You will want to work on both repairing your personal credit and building business credit. Also, the only way to divide personal and business credit is to be incorporated. If you are a sole proprietor, your personal credit IS your business credit.

            One option you may have is to purchase equipment with a capital lease. These leases are structured so you can purchase your equipment for a nominal amount (usually $1) at the end of the lease term. Leasing typically provides 100% financing with only the first and last month lease payments due at the end of the term. Because the equipment is used as collateral for the lease it can be a lot easier to get approved for a lease than traditional bank financing. Leasing does not require perfect credit so depending on how bad your personal credit is damaged you may be able to qualify. I have had clients with damaged credit get approved for an equipment lease if they put a 10-20% downpayment on the equipment being leased. By doing this the leasing company's collateral position is stronger making the transaction less risky than if 100% of the cost is leased.

            As for personal credit goes, it is in your best interests to immediately start working on improving it. You can dispute any information on your credit report for free through the 3 major credit bureaus. If there is any innaccurate information in your credit history you can easily dispute it and get it corrected. There are services out there that charge a fee to do this for you but you must be extremely careful when selecting a credit repair firm. There are many scam artists out there that charge high fees and promise the world but in the end they do nothing for you.

            One way to start building new tradelines is by obtaining a "secured" mastercard or visa. "Secured" means that you send the card issuer $500 and they issue a credit card with a $500 limit. Use the card for small purchases every month and pay the balance in full. It is best to start with at least 2 tradelines and use them responsibly. After 6 months you may see a dramatic increase in your credit scores. I have had clients do this many times in the past and they were able to qualify for regular unsecured credit cards quite quickly. Orchard Bank used to be one of the largest providers of secured credit cards and they do report all activity to the 3 major credit bureaus. I recommend shopping around for secured cards because the credit market is always changing.

            Hope this helps!