Thread: afraid to screw up my credit if business will faile

Originally Posted by newtothis

I am afraid to round my credit history.

What does it mean to "round" your credit history?

i am sorry, i ment, ruined.

One solution i gues would be to start a llc, but my biggest thing is not to fail, but if i stat a business and its not working out, i will not be able to pay a loan back, or pay for my house or for my car, so all those non payments will bring my credit down to the floor.

what then ? no banks will work with me in the future?

Any suggestions on how to overcome that or build a strategy to keep my credit safe ?

Why don't you use this as motivation to not fail. The simple answer to this problem is to not fail, but succeed.

It seems to me you are focusing on the obstacles instead of the opportunities. You need to change your mindset.

You will never start a business if you keep worrying about this problem. Have faith in yourself and just do it. Don't let this fear keep you from your dreams. This is what most people do and this forum isn't for most people. It's for people who push all their fears aside and bite the bullet to live the life that they want and deserve.

Instead of thinking about what will happen if you fail why don't you think of what will happen if you succeed or ways to succeed.

Originally Posted by newtothis

Any suggestions on how to overcome that or build a strategy to keep my credit safe ?

My best suggestion is to get rid of the negativity. If you say your business will fail, odds are it will fail. Keep a positive and optimistic view and you will do much better.

Someone convinced you along the way that in order to start a business you must incur debt. That is simply not the case. There are MANY business models that can be started and operated with sweat equity alone. If the thought of debt gives you night terrors, my suggestion is just don't do it. Choose one of the thousands of other business models that require only your hard work.

Some people by their nature are highly sensitive to risk. There is nothing inherently good or bad about this attribute of your personality / spiritual perspective. If you don't want to use OPM/Leverage/Debt, simply choose another business path.

One other thing to keep in mind. Taking on risk (debt, exposure, etc) does not imply a proportional gain in reward. In other words, taking out a construction loan to add a studio to your gym does not mean there is a proportional increase in new gym membership contracts waiting for you on the other side. This is why risk/reward analysis is necessary when considering to use OPM/Leverage/Debt.

Originally Posted by maximus20895

Why don't you use this as motivation to not fail. The simple answer to this problem is to not fail, but succeed.

It seems to me you are focusing on the obstacles instead of the opportunities. You need to change your mindset.

You will never start a business if you keep worrying about this problem. Have faith in yourself and just do it. Don't let this fear keep you from your dreams. This is what most people do and this forum isn't for most people. It's for people who push all their fears aside and bite the bullet to live the life that they want and deserve.

Instead of thinking about what will happen if you fail why don't you think of what will happen if you succeed or ways to succeed.

A whole wealth of knowledge in that post alone. I never took ACTION until I changed my MINDSET recently. Instead of focusing on the obstacles that I may or may not ever go through to reach my goal. I now focus on what is needed for me to reach one more step closer to my goal and focus on nothing else. I even look at my J.O.B. differently now, I think of my job as a tool to generate capital for my ventures nothing more. Everyone around me thinks I'm crazy and that I'm living a pipe dream. Especially 6 weeks ago when I told people that I was writing a book to sale haha, I didn't get anything but weird looks from them and was told a few times why would anyone would want to buy a book from me. 6 weeks later and I've already made a few sales to cover the cost spent along with some pocket change. But even in those few weeks I've went through many short ups and downs (currently down) but I'm focusing on my goal and what I need to accomplish and I feel better than ever!

They say a ship in the harbor is safe, but ships were made for sailing. Planes were made for flying, people were made for living. What is the absolute worst that could happen? Your credit takes a hit... so you rebuild it? What happens when you fall down? You get back up! The only reason people can walk is because they tried even though they knew they might fall down.

The engineers will teach us that a ship in the harbor is in more danger than the one at sea, it will collect more barnacles and decay faster. The planes will rust on the ground faster than flying in the heavens. A house will decay faster when no one lives there than when someone is there to keep it up.

If you really want to know about risk, take a look at the risk of not acting. If you had made it to B&P this year snowbank presented about why it is riskier to NOT take action than it is to take action.

Good luck friend!

Have you created a business plan? There is a saying, a failure to plan is planning to fail.

I love this "If you really want to know about risk, take a look at the risk of not acting."

That is so true, yet that is how countless people live their lives. They want to own a coffee shop or manage a restaurant and some even have a nifty little invention, but they don't take action. Why? Because of their mind set!!! If they truly believed that quote they would of already been successful years ago.

Everything has to do with your mindset!!!! I cannot stress that enough. Everyone, I mean everyone has a dream of being successful one day, but so few people do it. Why? Is it because they don't have the perfect business plan? NO. It's because they think that they can't do it or it's too hard so they don't take ACTION! Everybody has a plan or a way to get what they want, but so few people do.

Correct mindset leads to correct action! Change your mindset and success will follow.

maximus20895 your posts are very inspirational and so true

Thanks

That really means alot. I sincerely appreciate it.

And you can call me Max :P

Credit history is over rated, it can be fixed with time. But never taking the jump is a crime, and eventualy you wake up one day to old and your life has passed you by.

Originally Posted by newtothis

I have been thinking about reasons why i am afraid to take a jump a start a business.
and i found one biggest one. I am afraid to ruin my credit history.

Can anyone suggest what can be done about that ?

Though all of the posts here are dead on balls accurate, I think there is one major thing that has been overlooked in this entire thread. There is one thing that "New" must learn how to do before he/she will ever be able to truly become successful.

New, you must learn how to fail. I don't mean start something to fail, I am talking about allowing yourself to make mistakes. Inside you somewhere, someone told you that failing is a bad thing. Hell, it gets you step closer to finding the answer... at least you know what NOT to do. So you don't have to do it that way again.

Perhaps, it is not just the action of failing that makes it positive, but how you deal with the failure. If you LEARN from the mistake, then you turn it into a positive thing.

You can start by making a few small choices in something not as big as a business that can ruin your credit (though, as said, that is much over rated). Try something that fits well within your budget, that gains income as you need it to support your project. Learn how to take risk by forcing yourself just outside that comfort box. Find projects where you have a best case scenario and a worst case scenario and the worst case scenario is uncomfortable for awhile but an acceptable consequence. And then go for it.

Most importantly, take ANY action. Even wrong action is better than no action. It is about learning and using experiences that brings about success.

While I agree with everyone who has suggested that you simply not worry about it, I think there's a real solution out there that means you won't HAVE to worry about it. And you already touched on it. Simply create a business entity that earns its own credit rating, without any regards to or association with your personal credit. There is at least one really good thread here about business credit. I'll try to find it.

I believe this is the business credit thread that Jill referenced.

There may be more though.

This is a valid concern...

But I am more afraid of having to work for somebody else another 50 years of my life.

I am more concerned with being an 80 yr old with 820 in credit score, but depending on my kids or the government to make it.

Have you tried comparing the risks with the rewards?

oh, and yes, the advice here is amazing.

Originally Posted by kwerner

I believe this is the business credit thread that Jill referenced.

There may be more though.

I have been a lurker over on creditboards for year's. I have used many of the methods they teach to build credit for the C-Corps and LLC's I control. Here is a very good thread on which accounts you would open to build the credit score of ones business.

BUSINESS CREDIT TIERS - CreditBoards