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Plain-language lessons, definitions, myth busters, and scam alerts in English and Spanish.
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Funding readiness
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The glossary explains credit and funding terms without requiring you to buy a product.
Myth busters and scam alerts help you ask better questions and avoid misleading claims. Never share sensitive identifiers with an unverified provider.
A credit report is a record of information about how you have used credit. It may list credit cards, loans, and some collection accounts, along with account balances, payment status, dates opened, and whether an account is open or closed. Reports can also include identifying information and inquiries from applications.
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Start by reviewing each credit report, not just a score summary. Check your name and other identifying details, then look through every account for unfamiliar lenders, incorrect balances, wrong account status, duplicate entries, or payment marks that do not match your records. Also check dates and hard inquiries you do not recognize.
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A goodwill letter is a request asking a creditor to voluntarily adjust a late-payment mark that is accurate. A person might consider writing after an unusual hardship or one-time mistake, especially if the account is now current and the person's broader payment record has been strong. The letter is a request, not a legal right to erase correct information.
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Many widely used U.S. credit scores consider five broad factors, though models and weights vary. Payment history looks at whether payments were made on time and at the seriousness and recency of missed payments. Paying bills by their due dates is a useful habit, but no single action guarantees a particular score.
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Credit utilization usually describes revolving balances compared with credit limits. For example, a $200 balance on a card with a $1,000 limit is 20% utilization for that balance. Lower reported utilization is generally viewed favorably by many scoring models, but no universal percentage guarantees a score or approval. A score can also depend on the whole credit file and the model used.
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An authorized user is someone permitted to use another person's credit-card account, usually without being legally responsible for paying the balance. A trusted family member might add you to an older card with a long record of on-time payments. If the issuer reports authorized-user accounts to the bureaus and the scoring model considers them, that history may appear on your report and could affect a score.
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Rent and utility payments are not automatically included in every credit report or score. Many landlords and utility providers do not report routine, on-time payments to the major credit bureaus. As a result, paying these bills reliably may not build conventional credit history unless the payment information is reported through a participating provider or service.
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Fundability is how clearly a lender or supplier can verify that your business is real, active, and able to meet its obligations. It is not a promise of approval. Reviewers may compare your application with public records, business credit files, bank information, and documents you provide. Consistent details make that review easier.
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A business entity is the legal structure under which a business operates. Common U.S. choices include a sole proprietorship, partnership, limited liability company (LLC), and corporation. The right fit depends on your location, owners, activities, risk, tax situation, and plans—not on a claim that one structure automatically builds credit or unlocks loans.
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A business address and phone number help customers, agencies, banks, and suppliers identify and reach you. The right address depends on what your business does and on local law, licensing rules, and each lender’s requirements. A home address may be permitted for some businesses, while zoning, privacy, or licensing rules may limit its use.
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Personal and business credit are related to borrowing but are not the same file. Consumer bureaus generally maintain information about individuals; business credit bureaus collect data about businesses. Which bureau a lender checks depends on the product and provider. A business may have a thin or no-file history even if its owner has strong personal credit, and reported information can differ across bureaus.
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Net 30 is a payment term that generally means the full invoice amount is due within 30 days. Check the written contract or invoice for when the clock starts: it may be the invoice date, shipment date, or another agreed event. The term does not necessarily mean you receive 30 days of credit from the moment an order is placed.
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A D‑U‑N‑S Number is a business identifier issued by Dun & Bradstreet (D&B). It helps distinguish a business location in D&B’s system; it is not a government-issued tax number, credit score, or approval. A business may have different identifiers in other databases. Use the official D&B process to request or manage a number, and check current eligibility and processing details directly with D&B.
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Small businesses can use several kinds of financing, and each fits a different need. An SBA loan is made by a participating lender, with part of the lender’s risk backed by the U.S. Small Business Administration. It may offer structured repayment, but eligibility, rates, fees, and timing depend on the lender and program.
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DSCR means debt service coverage ratio. It compares money available to pay debt with the debt payments due during the same period. Lenders may use it to assess whether a business’s cash flow can support existing and proposed borrowing. Different lenders can define the inputs differently, so ask which figures and period they use.
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A lender may ask for records to understand the business, its owners, and its ability to repay. Requirements differ by lender, financing product, business age, and application. Preparing organized records can make questions easier to answer, but it does not guarantee an offer or approval.
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Customers often compare local businesses before deciding where to call, visit, or buy. Reviews can give people a sense of what past customers experienced, including service, communication, and reliability. A steady pattern of thoughtful, recent feedback can help reduce uncertainty, while unanswered concerns may leave questions. Reviews do not replace good service, and no business can control every customer’s opinion.
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Funding is a tool, not a customer by itself. Before spending borrowed or invested money, connect each planned cost to a practical business goal. For example, tools might increase the number of jobs you can complete, while marketing may help more suitable customers discover your service. Estimate the cost, timing, and capacity needed to deliver what you promote.
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Truth: Checking your own report or score is generally a soft inquiry and does not lower your score. A lender’s application review may be a hard inquiry.
Truth: Closing a card does not automatically help and may reduce available credit, raising utilization. Account-age effects depend on the scoring model and credit file.
Truth: You do not need to pay interest or carry a balance to build payment history. Paying the statement balance by the due date can avoid interest on purchases when the account’s terms allow.
Truth: Payment may update the account status but does not automatically remove accurate information. Reporting and removal depend on applicable rules and the bureau or collector’s practices.
Truth: Businesses often use an EIN for tax and business identification, but lenders may lawfully request an SSN for identity checks, a personal credit review, or a personal guarantee. Requirements vary.
Truth: An LLC creates a legal entity but does not automatically create credit history or qualify it for financing. The business may need reportable accounts and a track record, and lenders may still assess owners.
Truth: Some financing options may be available to newer businesses, but qualification can depend on revenue, owner credit, collateral, experience, and guarantees. Options and costs vary.
Truth: Lenders may use different bureaus, scoring models, versions, and additional underwriting criteria. A score shown to you may differ from the score a lender uses.
Truth: You can dispute information that is inaccurate or incomplete, but accurate, timely information generally cannot be removed just because it is unfavorable. No service can promise a lawful deletion of all negatives.
Truth: Income is generally not a factor in standard credit scores, though lenders may ask about income when assessing ability to repay. Credit reports and scoring models focus on credit-related information.
If someone promises guaranteed approvals, asks you to use a CPN or new identity, or offers to change your financial records, stop and talk to us.
What it is: A seller offers a credit privacy number (CPN) or another number to use instead of your Social Security number on credit applications.
Why it is a problem: Using a CPN or another person’s number to deceive a lender or conceal identity may constitute federal crime or fraud. A CPN is not a lawful replacement for an SSN.
What to do instead: Use your accurate identity information. Check your credit reports through authorized channels and seek help from a reputable nonprofit counselor or qualified attorney if needed.
What it is: A promoter claims you can start a separate credit file with an EIN and keep personal credit problems hidden from lenders.
Why it is a problem: An EIN is a tax identifier, not a substitute identity or a way to conceal required information. Misrepresenting identity or omitting requested information can be unlawful and may lead to denial or legal consequences.
What to do instead: Apply in the correct business name and provide truthful information requested by the lender. Ask how the lender uses business and personal credit.
What it is: A company demands payment in advance and promises to erase correct late payments, collections, or bankruptcies.
Why it is a problem: Accurate negative information generally cannot be legally removed simply because you pay a company. Promises of guaranteed deletions are a warning sign, and advance-fee rules may apply to credit-repair services.
What to do instead: Dispute genuinely inaccurate or incomplete entries with the relevant bureau and furnisher. Review the service contract and consumer protections before paying for help.
What it is: An advertiser guarantees a loan or business credit card regardless of credit, income, or business history, often for a fee.
Why it is a problem: Legitimate providers assess applications and cannot promise approval before underwriting. The offer may be a lead-generation scheme, costly product, or identity-theft attempt.
What to do instead: Verify the lender independently, review eligibility and total costs, and never share sensitive information through an unverified link.
What it is: A supposed lender asks you to pay an upfront “insurance,” processing, or release fee before sending a promised loan, especially with a guarantee despite poor credit.
Why it is a problem: Scammers may take the fee and disappear. Legitimate fees and their timing vary, but a guaranteed loan requiring payment first is a serious warning sign; laws restrict advance fees in some contexts.
What to do instead: Confirm the lender’s identity and licensing with relevant authorities, and do not pay through gift cards, wire transfers, or cryptocurrency. Read the written terms and verify fees directly with the lender.
What it is: Someone offers to create or alter statements, deposits, tax records, or sales figures to help an application look stronger.
Why it is a problem: Submitting fabricated financial information can be fraud and may expose the applicant and business to denial, repayment demands, or legal consequences.
What to do instead: Submit accurate records, correct bookkeeping errors, and explain your business’s actual cash flow. Ask a qualified accountant or lender what documentation is acceptable.
What it is: A seller charges to add you as an authorized user on an account and guarantees a particular score increase or loan approval.
Why it is a problem: Reporting, scoring effects, and lender treatment are not guaranteed; the account holder may remove you, and some lenders discount authorized-user data. Sharing personal data with a seller can also create privacy risks.
What to do instead: Build your own history with accounts you can manage responsibly. Review issuer terms and avoid paying for guaranteed score or approval claims.
What it is: A caller, message, or website claims a business has been selected for a government grant but demands a fee or personal/banking information to release funds.
Why it is a problem: Government grants are not awarded through surprise messages in exchange for a release fee. Impersonators may steal money or identity information.
What to do instead: Search for programs through official government websites and verify contacts independently. Never pay a fee to claim a supposed grant or share credentials in response to an unsolicited message.
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