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The Best Way to Establish Business Credit

Published By Janet Gershen-Siegel at November 21st, 2017

The Best Way to Establish Business Credit

You May Be Wondering About the Best Way to Establish Business Credit

Do you know the best way to establish business credit?

Every Business Needs Business Credit Growth

Small business credit is credit in a business’s name. It doesn’t connect to an entrepreneur’s individual credit, not even if the owner is a sole proprietor and the sole employee of the small business.

Accordingly, a business owner’s business and consumer credit scores can be very different.

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Due to the fact that business credit is independent from personal, it helps to protect a small business owner’s personal assets, in case of a lawsuit or business insolvency.

Also, with two distinct credit scores, an entrepreneur can get two separate cards from the same merchant. This effectively doubles purchasing power.

Another benefit is that even new ventures can do this. Going to a bank for a business loan can be a recipe for disappointment. But establishing small business credit, when done correctly, is a plan for success.

Individual credit scores are dependent on payments but also various other components like credit usage percentages.

But for business credit, the scores actually only depend on whether a small business pays its bills on time.

The Process

Growing small business credit is a process, and it does not occur without effort. A company will need to actively work to develop small business credit.

Nonetheless, it can be done readily and quickly, and it is much faster than developing personal credit scores.

Vendors are a big component of this process.

Carrying out the steps out of order will result in repetitive denials. No one can start at the top with business credit. For example, you can’t start with retail or cash credit from your bank. If you do, you’ll get a rejection 100% of the time.

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Company Fundability™

A company needs to be Fundable to credit issuers and vendors.

As a result, a company will need a professional-looking website and email address. And it needs to have site hosting bought from a hosting company.

In addition, business phone numbers should have a listing on 411, which you can get via

At the same time, the business telephone number should be toll-free (800 exchange or the equivalent).

A business will also need a bank account dedicated purely to it, and it needs to have every one of the licenses essential for operation.


These licenses all must be in the correct, appropriate name of the business. And they must have the same company address and telephone numbers.

So keep in mind, that this means not just state licenses, but possibly also city licenses.

Dealing with the Internal Revenue Service

Visit the Internal Revenue Service web site and acquire an EIN for the company. They’re totally free. Select a business entity like corporation, LLC, etc.

A business can start off as a sole proprietor. But they will probably want to switch to a type of corporation or an LLC.

This is in order to decrease risk. And it will make best use of tax benefits.

A business entity will matter when it comes to taxes and liability in case of a lawsuit. A sole proprietorship means the entrepreneur is it when it comes to liability and taxes. No one else is responsible.

Sole Proprietors Take Note

If you run a small business as a sole proprietor, then at least be sure to file for a DBA. This is ‘doing business as’ status.

If you do not, then your personal name is the same as the business name. Therefore, you can find yourself being personally responsible for all company financial obligations.

But never look at a DBA filing as being anything beyond a steppingstone to incorporating.

Starting the Business Credit Reporting Process

Begin at the D&B web site and obtain a free D-U-N-S number. A D-U-N-S number is how D&B gets a small business into their system, to produce a PAYDEX score. If there is no D-U-N-S number, then there is no record and no PAYDEX score.

Once in D&B’s system, search Equifax and Experian’s web sites for the small business. You can do this at If there is a record with them, check it for correctness and completeness. If there are no records with them, go to the next step in the process.

By doing this, Experian and Equifax will have something to report on.

The Best Way to Establish Business Credit: Vendor Credit

First you need to establish trade lines that report. This is also called vendor credit. Then you’ll have an established credit profile, and you’ll get a business credit score.

And with an established business credit profile and score you can start to get more credit.

These kinds of accounts have the tendency to be for the things bought all the time, like marketing materials, shipping boxes, and office furniture.

But first off, what is trade credit? These trade lines are credit issuers who will give you starter credit when you have none now. Terms are oftentimes Net 30, versus revolving.

Therefore, if you get approval for $1,000 in vendor credit and use all of it, you need to pay that money back in a set term, such as within 30 days on a Net 30 account.


Net 30 accounts have to be paid in full within 30 days. 60 accounts must be paid in full within 60 days. In comparison with revolving accounts, you have a set time when you must pay back what you borrowed or the credit you used.

To launch your business credit profile the right way, you need to get approval for vendor accounts that report to the business credit reporting agencies. As soon as that’s done, you can then use the credit.

Then repay what you used, and the account is on report to Dun & Bradstreet, Experian, or Equifax.

Vendor Credit – It Helps

Not every vendor can help in the same way true starter credit can. These are vendors that will grant an approval with marginal effort. You also want them to be reporting to one or more of the big three CRAs: Dun & Bradstreet, Equifax, and Experian.

You want more of these to move onto the next step.

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The Best Way to Establish Business Credit: Monitor Your Business Credit

Know what is happening with your credit. Make certain it is being reported and address any errors as soon as possible. Get in the habit of taking a look at credit reports and digging into the specifics, and not just the scores.

We can help you monitor business credit at Experian, Equifax, and D&B for only $24/month. See:

Update Your Information

Update the relevant information if there are inaccuracies or the information is incomplete.

The Best Way to Establish Business Credit: Fix Your Business Credit

So, what’s all this monitoring for? It’s to dispute any inaccuracies in your records. Mistakes in your credit report(s) can be corrected. But the CRAs usually want you to dispute in a particular way.


Disputing credit report mistakes normally means you specifically detail any charges you contest.

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The Best Way to Establish Business Credit: Takeaways

Always use credit smartly! Don’t borrow beyond what you can pay off. Monitor balances and deadlines for payments. Paying off punctually and completely will do more to raise business credit scores than almost anything else.

Building business credit pays. Good business credit scores help a business get loans. Your credit issuer knows the business can pay its debts. They know the small business is bona fide.

The small business’s EIN links to high scores and credit issuers won’t feel the need to require a personal guarantee.

Business credit is an asset which can help your business for many years to come. Learn more here and get started toward establishing business credit.

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