Is it faster to improve your personal credit score or your LLcs.

[Don Draper]

I was hoping to get some insight on improving credit scores. I was under the impression that a bank or lending institution would pull a LLCs. members personal credit if that member controlled more than 25% of the entity.  Now if there are 4 members with 25% control... are any of the members credit pulled? Once the LLc has a duns and Tx ID #, are the members individual credit still being pulled.. or just the Dunns #?

Which builds faster?

[Jonathan Bombaci]

Ask your bank how they do it. Credit unions may do it differently than major banks and since you're trying to buy in a LLC you'll automatically be in the commercial real estate space which has different rules. On commercial property they look at the actual property first. If it's a smoking deal that fits perfectly into their underwriting box you may not need great credit, if it just passes their minimum standards from a Debt Servicing standpoint or doesn't quite fit the underwriting box then the strength of the borrower(s) will be critical.

The Credit Union I tend to use does this for anyone with more than 20% equity stake in the deal that being said if the LLC is brand new (less than a few years old), and doesn't have the assets to support the purchase, they will require someone (or everyone) to personally guarantee the loan. So I'd imagine even if you set it up so 6 people each have 15% stake, whoever ends up guaranteeing the loan will have their credit pulled and put on the file.

I think the difficulty you're going to run into with trying to get the LLC's credit score up is the length of credit history portion of the score. Even a few years of strong credit history isn't much compared to the credit history on your personal score. That being said talk to you lender. Many of my lenders I work with, or credit amnesty companies or have programs to analyse credit scores and figure out how to increase them with the least amount of work. I have one situation where the borrowers had to pay off something like a $500 credit card balance to increase their credit score almost 40pts.

Best of luck!