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Building Your Business Credit – the Foolproof Way to Better Business Funding

Published By Janet Gershen-Siegel at May 16th, 2018

Building Your Business Credit – the Foolproof Way to Better Business Funding

Building Your Business Credit Can Be Easy

Are You Building Your Business Credit?

Do you know about building your business credit? We break down just what you need to know and show you what will work.

Building better business credit means that your business gets chances you never felt you would. You can get brand-new equipment, bid on real estate, and cover the company payroll, even when times are a bit lean. This is particularly helpful in holiday firms, where you can go for calendar months with solely hardly any sales.

Understand a bit of what affects your business credit before you can make it better.

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Building Your Business Credit: Your Payment History Truly Matters

Tardy repayments will influence your small business credit score for a good seven years. If you pay your small business financial obligations off, as rapidly as possible and as fully as possible, then you can make a very real difference when it involves your credit scores.

Be sure to pay in a timely manner and you will reap the benefits of punctuality.

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A bad business year could wind up on your consumer credit score. And in case your business has not been around for too long, it will directly impact building your business credit. Fortunately, you can separate them both by taking measures to separate them.

For instance, if you get credit cards solely for your business, or you open up business checking accounts and various other bank accounts, then the credit reporting bureaus will begin to address your consumer and small business credit independently.

Also, make sure to incorporate. You can also take care of your company’s charges with your small business credit card or checking account. And make sure it is the small business’s full name on the bill and not your own.

Building Your Business Credit: Doing it Effectively

Since business credit is independent from individual, it helps to safeguard a small business owner’s personal assets, in case of a lawsuit or business bankruptcy. Also, with two separate credit scores, a small business owner can get two separate cards from the same merchant.

This effectively doubles buying power.

Another advantage is that even startup companies can do this. Visiting a bank for a business loan can be a formula for frustration. But building small business credit, when done correctly, is a plan for success.

Personal credit scores depend upon payments but also various other considerations like credit use percentages. But for corporate credit, the scores actually only depend on whether a company pays its invoices promptly.

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Building Your Business Credit: The Process

Growing company credit is a process, and it does not happen without effort. A small business has to proactively work to build company credit. That being said, it can be done readily and quickly, and it is much speedier than building individual credit scores.

Vendors are a big component of this process.

Accomplishing the steps out of order will result in repeated denials. No one can start at the top with company credit.

Building Your Business Credit Means Building Company Fundability

A business needs to be authentic to creditors and vendors. For this reason, a business will need a professional-looking web site and email address, with website hosting purchased from a supplier such as GoDaddy.

And business phone numbers should be listed on

In addition the company telephone number should be toll-free (800 exchange or the equivalent).

A company will also need a bank account dedicated purely to it, and it must have all of the licenses needed for running. These licenses all must be in the accurate, accurate name of the company, with the same small business address and telephone numbers.

Note that this means not just state licenses, but potentially also city licenses.

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Working with the IRS

Visit the Internal Revenue Service web site and get an EIN for the corporation – they’re free of charge. Select a business entity such as corporation, LLC, etc.

A company can begin as a sole proprietor but should change to a form of corporation or LLC to limit risk and make the most of tax benefits.

A business entity will matter when it concerns taxes and liability in the event of a lawsuit. A sole proprietorship means the entrepreneur is it when it comes to liability and tax obligations. Nobody else is responsible.

Starting Off the Business Credit Reporting Process

Begin at the D&B web site and get a free DUNS number. A DUNS number is how D&B gets a corporation into their system, to produce a PAYDEX score. If there is no DUNS 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 accuracy and completeness.

If there are no records with them, go to the next step in the process. In this way, Experian and Equifax will have activity to report on.

Vendor Credit

First you must 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 getting more credit.

These varieties of accounts often tend to be for the things bought all the time, like shipping boxes, outdoor work wear, ink and toner, and office furniture.

But first of all, what is trade credit? These trade lines are creditors who will give you preliminary credit when you have none now. Terms are generally Net 30, instead of revolving.

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

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

Building Your Business Credit: The Credit Reporting Bureaus Can Just Plain Get it Wrong

You need to check your credit.

Monitor Your Business Credit

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

We can help you monitor business credit at Experian, Equifax, and D&B for a lot less than it would cost you at the CRAs.

Update the info if there are mistakes or the relevant information is incomplete. While you’re at, it you should also be checking the credit reporting bureau which solely handles personal and not small business credit, TransUnion.

Challenging Errors

What’s all this monitoring for? It’s to dispute any mistakes in your records. Errors in your credit report(s) can be corrected. But the CRAs generally want you to dispute in a particular way.

Disputing credit report mistakes means you specifically detail any charges you challenge.

Building Your Business Credit: A Word to the Wise

Always use credit sensibly! Don’t borrow more than what you can pay back. Monitor balances and deadlines for repayments. Paying off punctually and in full will do more to boost business credit scores than nearly anything else.

Establishing business credit pays. Great business credit scores help a corporation get loans. Your loan provider knows the small business can pay its financial obligations. They know the company is bona fide. The small business’s EIN connects to high scores, and loan providers won’t feel the need to request a personal guarantee.

Building Your Business Credit: Takeaways

Once you know what has an effect on your small business credit score, you are that much nearer to building your business credit. Learn more here and get started toward building business credit attached to your company’s EIN and not your SSN.

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