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Using Aged Shelf Corps to Build Credit

Updated: Mar 14

What They Don't (and Won't) Tell You


Have you ever thought about buying a shelf corporation to build business credit? If so, you may want to think again... While using a shelf corporation is technically legal, they become illegal if they’re used to deceive creditors. Not only are these so-called 'shortcuts' expensive, but how you choose to use that shelf corporation could land you in hot water.

For the past decade, several unscrupulous strategies for using shelf corporations to build business credit have been promoted online, along with outlandish promises of significant results of credit achieved and wealth rewarded. What they don't (and won't) tell you, is that banks, credit card companies, lenders, financial organizations and commercial credit bureaus are keenly aware of this sneaky trend and are putting up roadblocks to curb potential losses.

Let me be clear — At Starpoint Credit Solutions, we strongly recommend against using a shelf corporation in any attempt to build business credit. In fact, we won't even take on a client who is using a shelf corporation because we already know, eventually, that house of cards is going to crumble, and the end result will be anger, frustration and exasperation. I certainly don't want any of that negativity aimed back at me or my company's reputation!

My mother once told me:

"If you are having to look over your shoulder to see if you're about to get caught doing something wrong, you're doing something wrong!" 

Here are just a few of the reasons why using shelf corps is a risky strategy:

  1. The very first thing you have to do to make a shelf corporation your own is update the principal's name. Did you know that commercial credit bureaus receive corporate details via automated uploads from your Secretary of State? For this reason, they've already archived historical data about that company going all the way back to the day it was formed. They can see when a shelf corporation was originally filed, every annual report that's ever been filed and when it was sold to a new principal. When you try to update that information on the company's credit report, the commercial credit bureaus can see what you are trying to do. Don't be surprised if they change that expensive three-year aged corporation so it's now just ONE DAY OLD, beginning on the day the new principal took over.

  2. That's because shelf corps have long been associated with illicit activities like fraud, money laundering and tax evasion. Most lenders consider them deceptive and misrepresentative of a company's credibility, especially when they’re used in the wrong way. For this reason, credit underwriters will often review a company's corporate registration history to verify the age, address, legal structure, status and ownership details. When they uncover the former 'shelf' status, not only will they deny and void the application, they will usually ban any future applications from this company and any other companies that you (personally) are associated with.

  3. Did you know that using a shelf corporation to misrepresent the extent of your company's income or active operations for the purpose of opening an account or applying for a loan or credit card at a federally-insured bank may be considered federal bank fraud? For those who are convicted, the criminal penalties are steep — up to a $1,000,000 fine and 30 years of imprisonment.

  4. Applying for credit for a shelf corporation —in and of itself— is suspicious behavior since shelf corps typically don't have or generate income. In most cases, they are just used as a means to hold, shield, hide or 'park' assets. Without having income or expenses, there's no reason a shelf corporation would need credit. That's why commercial credit bureaus typically won't assign their standard Credit Limit Recommendations to a company that they know was previously identified as a shelf corporation.

  5. To protect their high value clients, commercial credit bureaus are constantly monitoring for known and unknown companies, tradelines and practices that are offering or providing 'shortcut' strategies for building business credit. They have seen thousands of people try these shortcuts — and arguably, most have done so with fraudulent intent. While YOU may not have fraudulent intent, by using the same risky strategies and methods of those who did, your activities could end up lumping you in with that group. The bureaus will automatically assume that, like all the others, you are just trying to create an illusion of credit for deceptive purposes.

  6. Over the past several years, commercial credit bureaus have been inundated by thousands of shelf corporations that fraudulently achieved business credit and harmed creditors that relied on the bureau's insight. This has had a negative impact on their own reputation as purveyor of creditworthiness. This has caused the bureaus to become laser-focused on specific states, companies and registered agents who have been willing participants in less-than-reputable schemes. They assign risk flags to identify certain bad actors. If your shelf corporation is associated with one of those 'bad actors', you could be seen as 'guilty-by-association'.

  7. If you happen to purchase your shelf corporation from one of those sellers and you follow their instructions, you (individually) and your corporation may be assigned a high risk status that results in the removal of all credit scores, blockage of your capability to achieve credit, and cross contamination of any/every other business you have ever owned or will own in the future. In some cases, you may even be referred for investigation.

  8. Those who recommend the usage of shelf corporations will oftentimes also advocate for using a certain set of vendors and suppliers to help establish 'credit accounts' with companies where you can spend your hard-earned money to purchase products or services — with the ultimate goal being that those transactions will then get reported to the bureaus to help boost your business credit scores and ratings. What they don't (or won't) tell you, though, is that some bureaus have already disallowed those creditors to make sure that none of the payments you've made will ever be added to your business credit report!

  9. Companies who create, use, sell or recommend shelf corporations know exactly what they're doing. They know the product they are selling IS legal — right up until you, the purchaser, uses that product irresponsibly, even if they specifically told you what to do and how to do it. Even if the seller has advocated or promoted the many ways you can use a shelf corporation to surreptitiously "build business credit" — YOU are the one who will ultimately be held responsible for how you choose to use their product.

  10. Legitimate creditbuilding is cheaper, easier, faster and more sustainable. Even newly-formed start-ups can establish better business credit based upon legitimate data and reputable resources for the products and services they need.

Let's build your business credit the right way. That way, you can build up from a sturdy foundation that will last a lifetime, and you won't have to look over your shoulder to see if you are about to get caught doing something wrong.


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The opinions expressed on this website are those of Starpoint Credit Solutions LLC and its ownership.

All information is provided for educational and training purposes only.

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