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Easy Business Credit Building

Published By Janet Gershen-Siegel at December 23rd, 2017

Start Easy Business Credit Building Today

Easy business credit building means that your company obtains chances you never felt you would. You can get all new equipment, bid on real estate, and deal with the company payroll. And you can do so even when times are a bit lean. This is especially helpful in seasonal businesses, where you can go for months with only low sales.

As a result of this, you really should tackle building your business credit. Maintain and enhance your business credit scores and you will have these chances. Do not, and either you do not get these chances, or they will cost you a lot more. And no entrepreneur wants that. You will need to know what affects your business credit before you can make it better. Business Credit Building

Every Small Business Needs Easy Business Credit Building

Business credit is credit in a company’s name. It doesn’t tie to an owner’s personal credit, not even if the owner is a sole proprietor and the sole employee of the company.

Therefore, an entrepreneur’s business and individual credit scores can be very different.

The Advantages of Easy Business Credit Building

Due to the fact that business credit is distinct from individual, it helps to protect a small business owner’s personal assets, in the event of litigation or business insolvency.

Also, with two distinct credit scores, a business owner can get two different cards from the same merchant. This effectively doubles buying 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 building business credit, when done correctly, is a plan for success.

Consumer credit scores depend upon payments but also various other factors like credit use percentages.

But for small business credit, the scores really just hinge on if a company pays its invoices on a timely basis.

The Process of Easy Business Credit Building

Building business credit is a process, and it does not occur without effort. A business needs to actively work to establish business credit.

However, it can be done readily and quickly, and it is much swifter than establishing individual credit scores.

Merchants are a big part of this process.

Accomplishing the steps out of order will cause repetitive denials. No one can start at the top with company 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.

Small Business Fundability for Easy Business Credit Building

A small business must be fundable to lenders and vendors.

For this reason, a company will need a professional-looking website and e-mail address. And it needs to have website hosting from a supplier like GoDaddy.

And, business phone and fax numbers ought to have a listing on ListYourself.net.

Additionally, the business telephone number should be toll-free (800 exchange or the like).

A small business will also need a bank account devoted purely to it, and it must have all of the licenses necessary for running.

Licenses

These licenses all have to be in the perfect, appropriate name of the business. And they must have the same small business address and phone numbers.

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

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Learn more here and get started toward growing small business credit.

Dealing with the IRS for Easy Business Credit Building

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

A company can start off as a sole proprietor. But they will probably wish to switch to a sort of corporation or an LLC.

This is in order to limit risk. And it will take full advantage of tax benefits.

A business entity will matter when it pertains to taxes and liability in case of litigation. A sole proprietorship means the owner is it when it comes to liability and taxes. Nobody else is responsible.

Sole Proprietors Take Note

If you run a business as a sole proprietor, then at the very 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 small business name. Therefore, you can wind up being personally accountable for all company debts.

In addition, according to the IRS, by having this structure there is a 1 in 7 chance of an IRS audit. There is a 1 in 50 probability for corporations! Prevent confusion and noticeably decrease the odds of an Internal Revenue Service audit simultaneously.

Kicking off Easy Business Credit Building

Begin at the D&B web site and get a free D-U-N-S number. A D-U-N-S number is how D&B gets a company into their system, to generate 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 websites for the small business. You can do this at www.creditsuite.com/reports. 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.

Vendor Credit Tier

First you need to establish trade lines that report. This is also known as the vendor credit tier. 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 credit in the retail and cash credit tiers.

These types of accounts often tend to be for the things bought all the time, like marketing materials, shipping boxes, outdoor work wear, ink and toner, 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 commonly Net 30, rather than 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, like within 30 days on a Net 30 account.

Details

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

To start your business credit profile properly, you should get approval for vendor accounts that report to the business credit reporting agencies. Once that’s done, you can then make use of the credit.

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

Vendor Credit Tier – It Helps

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

You want 5 to 8 of these to move onto the next step, which is the retail credit tier. But you may have to apply more than once to these vendors. So, this is to validate you are responsible and will pay punctually. Here are some stellar choices from us: https://www.creditsuite.com/blog/5-vendor-accounts-that-build-your-business-credit/

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Learn more here and get started toward growing small business credit.

Retail Credit Tier

Once there are 5 to 8 or more vendor trade accounts reporting to at least one of the CRAs, then move onto the retail credit tier. These are companies which include Office Depot and Staples.

Only use your SSN and date of birth on these applications for verification purposes. For credit checks and guarantees, use the small business’s EIN on these credit applications.

One good example is Lowe’s. They report to D&B, Equifax and Business Experian. They need to see a D-U-N-S and a PAYDEX score of 78 or better.

Fleet Credit Tier

Are there 8 to 10 accounts reporting? Then move onto the fleet credit tier. These are service providers like BP and Conoco. Use this credit to buy fuel, and to fix, and take care of vehicles. Only use your SSN and date of birth on these applications for verification purposes. For credit checks and guarantees, make certain to apply using the small business’s EIN.

One such example is Shell. They report to D&B and Business Experian. They want to see a PAYDEX Score of 78 or more and a 411 company phone listing.

Shell might say they want a particular amount of time in business or profits. But if you already have adequate vendor accounts, that won’t be necessary. And you can still get approval.

Cash Credit Tier

Have you been sensibly handling the credit you’ve up to this point? Then move to the cash credit tier. These are service providers like Visa and MasterCard. Just use your Social Security Number and date of birth on these applications for verification purposes. For credit checks and guarantees, use your EIN instead.

One example is the Fuelman MasterCard. They report to D&B and Equifax Business. They want to see a PAYDEX Score of 78 or higher. And they also want you to have 10 trade lines reporting on your D&B report.

Plus, they want to see a $10,000 high credit limit reporting on your D&B report (other account reporting).

In addition, they want you to have an established business.

These are service providers such as Walmart and Dell, and also Home Depot, BP, and Racetrac. These are typically MasterCard credit cards. If you have 14 trade accounts reporting, then these are doable.

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Learn more here and get started toward growing small business credit.

Monitor Your Business Credit for More Easy Business Credit Building

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

We can help you monitor business credit at Experian and D&B for only $24/month. See: www.creditsuite.com/monitoring.

Update Your Record

Update the details if there are mistakes or the details is incomplete. At D&B, you can do this at: https://iupdate.dnb.com/iUpdate/viewiUpdateHome.htm. For Experian, go here: www.experian.com/small-business/business-credit-information.jsp. So for Equifax, go here: www.equifax.com/business/small-business.

Fix Your Business Credit for Even More Easy Business Credit Building

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

Get your business’s PAYDEX report at: www.dnb.com/about-us/our-data.html. Get your company’s Experian report at: www.businesscreditfacts.com/pdp.aspx?pg=SearchForm. And get your Equifax business credit report at: www.equifax.com/business/credit-information.

Disputes

Disputing credit report errors normally means you send a paper letter with copies of any evidence of payment with it. These are documents like receipts and cancelled checks. Never mail the original copies. Always send copies and retain the originals.

Fixing credit report inaccuracies also means you specifically detail any charges you dispute. Make your dispute letter as clear as possible. Be specific about the concerns with your report. Use certified mail so that you will have proof that you sent in your dispute.

Dispute your or your company’s Equifax report by following the instructions here: www.equifax.com/small-business-faqs/#Dispute-FAQs.

You can dispute mistakes on your or your company’s Experian report by following the instructions here: www.experian.com/small-business/business-credit-information.jsp.

And D&B’s PAYDEX Customer Service telephone number is here: www.dandb.com/glossary/paydex.

A Word about Easy Business Credit Building

Always use credit smartly! Never borrow beyond what you can pay off. Keep an eye on balances and deadlines for payments. Paying off punctually and fully will do more to boost business credit scores than pretty much anything else.

Growing business credit pays. Great business credit scores help a business get loans. Your credit issuer knows the company can pay its debts. They know the business is authentic.

The business’s EIN connects to high scores and credit issuers won’t feel the need to call for a personal guarantee.

Easy Business Credit Building – The Takeaway

Business credit is an asset which can help your small business for years to come. Learn more here and get started with easy business credit building.

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