Don't expect to create an LLC or a corporation to establish credit separate and apart from your own personal credit history. It won't work!

QUESTION.
I heard a radio program on which a gentleman promoting his own "incorporate in Nevada" company made some assertions which got me curious. He claimed that one may purchase real estate under a company or LLC name for liability protection.

He also mentioned that one may apply for credit as a corp and get better credit as a corp than one has accumulated personally. My credit score is just under 700 and I'm told that since I have so many mortgages on investment properties [paid promptly and up to date, of course], it will be difficult for me to break the 700 level.

Also wondered how I can purchase property in a corp name without suffering some percentage increase or an "absolutely NOT." As of yet, I'm unaware of how I might transfer ownership to my LLC - I imagine my lenders [GMAC, Countrywide, etc] will stop that immediately. yet, I hear this is the thing to do. How can I actually do it?

Also, should a company be formed by an associate of mine, may I have one of the LLC's be a member of his LLC?

The radio pundit claimed one should put everything he owns in his corporations so that he is personally protected in case of lawsuits, etc. What's your take on this?

Thank you for taking the time. This is a marvelous service you provide.

ANSWER.
You've asked me to provide too much information in your email. I'm a business coach in my SCORE capacity. I'm not a mere free service for asking questions that MIGHT relate to starting or running a business when there is no business in the picture. Your questions sound like you don't have a business, but instead just want to know how you might be able to get your credit rating up.

Corporations are separate legal entities from their owners. While it is true they can get a better credit rating than their owners, this truism can be misleading. Only well-established corporations that have developed a cash flow and good credit history can do this. You cannot simply form a corporation which does not have a credit history of its own and expect it to be able to get credit for you. It just doesn't work that way.

And yes, LLCs can be stacked. An LLC can own an LLC which in turn can own another LLC. But putting property in an LLC or corporation will not protect that property from your creditors. You still own the LLC or the stock in the corporation and your creditors can get an interest in your stock and thus an interest in any property that your corporation owns.

Make it a great day! Regards, -Jeff

Jeff Lippincott
SCORE.org Counselor
Princeton, NJ
scoreprinceton @ aol.com
www.scoreprinceton.org
www.jlippin.com