Most of the people exploring the option of buying a shelf corporation are doing so as they need access to credit to fund their business plan. We all know that it’s not easy to get funding for a new venture while establishing a reputation in the world of business takes time, effort, and a lot of money. So, we all come back to the same chicken and egg situation. How do you establish your business without access to credit or funds? That’s why we’re writing this blog to address some queries that are surely there in your mind. We’d love for you to attend one of our Funding Roadmap sessions to know more about the credit process and for personalized advice, which we give after understanding your situation in detail. You will also get some actionable suggestions, and if you implement these you can build a solid financial profile. Through the roadmap, we prepare for you, your chances of accessing credit and funding increase substantially, so it is well worth the cost! If you cannot do so, we’ll still try and give you a basic idea of how the credit rigmarole works, and the myriad ways that shelf corporations help you in getting through the tough credit process. Through this blog post, we will also navigate concepts such as Dun and Bradstreet’s Paydex Score, that many of you are aware of and some are not, and we’ll explain why Shelf Corps with 80 Paydex Score
Let us begin with the kind of funding that you are eligible for once you buy a shelf corporation. The funding for the first 6 months will be mostly of the unsecured kind through corporate credit cards. In some rare cases, you may be able to obtain corporate lines of funding from banks or credit unions, but these are usually sanctioned by banks on a case-to-case basis, depending on your location in the US, your personal credit profile, etc. This means that if you have not burdened yourself with excessive credit and also have an excellent history of repaying your personal liabilities, then your shelf corp’s chances of acquiring credit are bound to be pretty substantial!
Therefore, the first step in obtaining funding for your business is to ensure that your personal credit history is relatively clean, and we always advise our clients to get rid of any derogatory items such as overdue, etc. For most people, spotless credit history for the past 3 years can go a long way in giving your credit profile the boost that it needs. You should always ensure that you have in writing from your lenders that all your dues have been paid. Lenders sometimes misreport to credit bureaus and it is a pain to get these corrected, as bureaus are bureaucratic in functioning, and so are the banks! Securing such a document can ensure that these corrections happen quickly.
If you do not have at least 3 or more credit accounts, then it is our suggestion that you first apply for these, obtain them, and operate these accounts properly for a few months. Then we can focus on your shelf corporation’s credit needs. After all, Rome wasn’t built in a day!
Another very important thing to keep in mind is to not put in too many pointless queries for credit, as these tend to lower your credit score. We always tell our clients to apply for credit only when they are serious about accessing it, and not just to check their eligibility, as this will needlessly affect your personal credit score. Any more than 6 credit inquiries in the past 6 months will lead to a downgrade in your personal rating, so be very careful.
There is another aspect of credit that all of you need to keep in mind always. You should always ensure that you haven’t maxed out your credit limits, as not only is this imprudent but it also has a negative impact on your credit scores. Ideally, you should utilize on an average about one-third of your credit limits, as this indicates prudence to the lenders. If you are having higher utilization levels, then you should focus on slowly reducing expenses as this factor is extremely important for lenders when they evaluate your personal credit history, as a part of the larger evaluation of your shelf corporations’ credit application.
Now, let’s get to the methods that can be applied to get your shelf corporation in ship shape for a credit evaluation by a financial institution. The first thing is to ensure that the shelf company that you are buying does not have a bad credit history, as a lot of fraudsters are in the market selling you corporations with poor credit history disguised as aged corporations. Once you’ve confirmed that what you are buying is indeed a shelf corporation, then you need to start operations instantly. This is because you will be allotted a D-U-N-S Number by Dun and Bradstreet (D&B), as soon as your creditors start sending your payment information to the agency, and you do not need a pay a single penny for this. This is something that D&B is bound by law to do. This is a very common misconception in the minds of many new businesses and they get conned into paying for what is essentially a free service. The next step is to convert your corporation into a Shelf Corporation with 80 Paydex
We hope that we threw some light on the credit process through this post and as you all know, we’re always available for a chat on WhatsApp and email!