Facts on Carporate Credit

Facts on Corporate Credit

Many companies pick the wrong time to think about corporate credit. Owners should begin to develop a corporate credit rating when the company is healthy and not in need of credit. Ironically, vendors are less prone to offer lines of credit to companies that can't show a sound credit history. Top executives and entrepreneurs need to know basic facts about corporate credit.

Significance
1. Corporate credit allows companies to have a record of their payment history. It also tells consumers and potential investors the company is sound.
Features
2. Moody's, Standard and Poor's and Fitch IBCA are the major credit reporting agencies for companies. The highest rating is AAA, and C or D is the lowest. Anything lower than BBB or Baa presents a significant risk to potential lenders or vendors
Warning
3. Using personal credit instead of developing corporate credit may lead to personal liability. It will also present the lender with challenges when making personal purchases like a car or home.
Benefits
4. Companies with a AAA rating will enjoy significant lines of credit. This is beneficial when and if cash is scarce.
Prevention/Solution
5. Use vendors and lenders that report to credit reporting agencies in order to develop a credit profile as soon as possible. Maintain a high rating by paying debts according to contracted terms.

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Read more: Facts on Corporate Credit | eHow.com http://www.ehow.com/facts_4576242_corporate-credit.html#ixzz1G6AScjI9