inquiry about credit inquiries regarding credit-*head explodie*

[EricKei]

Silly question for people who know banking, credit, etc.

I have a tiny little LLC, I lost some business income due to Hurricane Isaac.

My *personal* credit is bad due to school loans I've almost never been able to make consistent payments on (I last had a credit card in the year 2000...and yet I still get calls from "cardholder services" scams offering to help reduce credit card bills...). I've been working on gradually improving it, but it's still too low to even get a gas card. I don't want any hits against it such as those caused when one attempts to get a new card, the score is borderline.

My LLC has no credit history whatsoever, and has its own EIN (with no employees aside from myself, I don't plan to change that anytime soon), and it's a sole prop.

I am looking into an SBA "emergency loan" and/or grant to help make up the shortfall. My question is this: Are my credit rating and that of the LLC considered one in the same? If not, which one gets checked if I apply for a credit card for the business specifically (meaning, usable for business expenses)?

[Andara Bledin]

I am not really in the business, but I'm fairly certain that you and your LLC are considered separate entities, and that that is one of the purposes of the LLC in the first place.

But definitely don't take my word for it.

As for working on getting your credit up, a good place to start is by hitting up a rent-to-own place for something small-ish that you need. Like, say, a desk for the office or something. Make sure you have the money for it up front, then make regular payments up until the cut-off point to pay off the balance before the full interest is applied. You'll end up paying about 50% more for the item in question, but you will also give yourself a payment history, which is vital in the credit game.

Also, a credit card is almost a requirement. Just never take it over 50% of the available credit (the credit companies rate on how many days it's over that line - I know because I have an account to keep an eye on my Experian rating, and that is one of the things that depresses my score), and pay it off every month except for a small balance of, say, 5-10%. Carrying a balance doesn't, to my knowledge, affect your credit rating, but I believe that future creditors look at that, as well. My credit score is higher for having the card, even allowing for the hit for the "days over 50%" metric.

The thing that will really hit your rating are past due and delinquent accounts. However, not having accounts at all is worse. My boyfriend has a great number - but because he never had any accounts, they wouldn't even consider him for the car loan. I had a judgement against me (long story, since paid off) and some delinquencies, but since I had the rent-to-own purchase, they gave me a chance.

But, as I mentioned, I'm not an expert. I can only tell you what I, personally, have experienced.

^-.-^

[EricKei]

Cool, thanks. I'll see what else I can dig up.

Regarding carrying a balance -- good idea. Every 5-10 years or so, shows like "60 Minutes" like to revisit the story of "just how credit card companies think"...As I recall, one of their recurring industry practices is the notion that they do NOT want customers who pay off 100% every month, ahead of the due date, as it means little or no interest charged. Such custys are susceptible to having their cards cancelled as "deadbeat" customers, iirc >_<

[Sapphire Silk]

Also, a credit card is almost a requirement. Just never take it over 50% of the available credit <snip>

The thing that will really hit your rating are past due and delinquent accounts. However, not having accounts at all is worse. My boyfriend has a great number - but because he never had any accounts, they wouldn't even consider him for the car loan. I had a judgement against me (long story, since paid off) and some delinquencies, but since I had the rent-to-own purchase, they gave me a chance.

Ditto on the credit card. I had a really bad one (36% interest rate) that the company canceled (refused to renew actually) due to my "credit report" which is actually better than when I first got the card. Their real reason is I haven't used it since I paid off the balance a year ago. I've since gotten another card that has a reasonable interest rate, that I carry a small balance off and make regular payments on it, so my credit rating should actually improve over time.

[taxguykarl]

Have you looked into secured credit cards. Mrs. TGK managed to rebuild hers after a bankruptcy (with her ex), starting with those. As it had a low limit ($500 IIRC--all she could scrape together), she paid it off monthly.

[Andara Bledin]

I have a secured card. It costs me $35 annually to have it, with an original limit of $300, but it also is a points card, so with regular use, I get irregular payments of $100 that I put toward the card every so often, so I come out ahead. Definitely look into a points card of some sort. Since mine is with my primary bank, it also makes it easier to maintain.

A full credit card is also useful if one has to rent a car or stay in a hotel. Far better than tying up your funds because you used a debit card (only one car place will even let you use a debit card any more that I know of).

^-.-^

[sms001]

If you are going to secure a loan through the SBA, then you already have an expert on tap. Call your SBA rep and ask. Don't know how deeply involved with them you are, but it is one arm of our dear ol' gubiment I can never praise enough. Everyone of them that I've ever dealt with has been honest, knowledgeable, and positively EAGER for me to succeed.

Give it a shot.

[EricKei]

sms -- that's part of what prompted me to post this...

- Immediately after hurricane, I tallied up damages (minor leak hit a tv, bunch of books, a couple couches, a little mold damage -- less than $1000 but that is a LOT to me right now) and lost wages/business for a couple of weeks, did an initial filing with disaster assistance -- special program set up specifically for these purposes

- Per their instructions, had to check with my insurance (I have renter's insurance) to see what they would cover, as DA deals with the balance. Damages were covered, but less than my deductible, so it's back to DA this coming week.

- Working on DA from the grant side, and also got a note from SBA saying I have like 2 days to initiate a loan claim (both are allowed, and actually encouraged, on the DA site). Will call them tomorrow for specific info on this.

Thanks, everyone!

- Secured cards are something I'd love to do, both on a personal level and a business one, but I lack the spare funds for it on either end (yes, they are distinct)

[Dilorenzo]

Just as this happens to be an area I work in - the only thing taken into account, in the US, as far as companies go, is the company credit history. When someone pulls and DnB report (Dun & Bradstreet, large enough company which runs credit checks on companies, assigning a "score" based on how they do), all that is pulled is the company history - not the owners.

We've had some companies come back squeaky clean owned by guys we know are not, for example.

[Andara Bledin]

I've actually run into companies that play shell games where the parent company will be squeaky clean but will spawn off LLCs that they use, abuse, and throw away after bilking their creditors and then disappearing off the face of the map only to spawn new ones. >_<

^-.-^

[EricKei]

Went to the SBA office and filed the app. From the what the agents there said, it seem sthat they will check the company credit (nonexistent) and maaayyybe personal -- but they only want company tax returns (haven't been around long enough for that), or, in my case, a letter stating that fact.

Wish me luck. ^_^

[Andara Bledin]

Good luck!

^-.-^