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Hacks to Building Business Credit – Epic!

Published By Janet Gershen-Siegel at October 22nd, 2017

Grab our Audacious Hacks to Building Business Credit

You need our awe-inspiring hacks to building business credit – yesterday!

Building business credit means that your company acquires chances you never felt you would. You can get new equipment, bid on land, and take care of the company payroll. And this can happen even when times are a bit lean. This is especially helpful in seasonal companies, where you can go for months with only very little sales.

As a result of this, you should focus on building your business credit. Strengthen and maintain your scores and you will have these chances. Do not, and possibly you do not get these chances, or they will cost you a lot more. And no company owner wants that. You have to know what impacts your business credit before you can make it better.

Hacks to Building Business Credit: Your Payment History Is a Big Deal

Tardy payments will have a bearing on your small business credit score for a good seven years. If you pay your business (and personal) financial obligations off, as fast as possible and as completely as you can, then see what happens? You can make a very real difference when it pertains to your credit scores.

Hack it out and make sure to pay without delay and you will enjoy the benefits of promptness.

Hacks to Building Business Credit: Your Personal Credit Can Influence Your Business Credit

Are you having a substandard company year? Then it could end up on your personal credit score. And in the event that your business has not been around for too long, you know what? It will directly influence your commercial credit. Nevertheless, you can separate both of them by taking steps to uncouple them.

For example, try this hack: you can get credit cards only for your business. Or you can open up business checking accounts and other bank accounts (or even get a business loan). And then the credit reporting bureaus will start to treat your personal and business credit independently. Also, be sure to incorporate, or at least register a DBA (doing business as) status.

You can also pay for your company’s bills with your business credit card or checking account. And make sure it is the business’s name on the bill and not your own.

Hacks to Building Business Credit: Credit History Length Matters

This is basically for how long your company has been making use of business credit. Naturally newer businesses will have short credit histories. While there is not too much you can particularly do about that and there’s no real hack for that, per se, do not despair.

Credit reporting bureaus will also review your personal credit score and your own history of payments. If your personal credit is good, and especially if you have a fairly long credit history, then your personal credit can come to the rescue of your business. That is, you did not just get your first credit card recently.

Naturally the opposite is also true. So, if your personal credit history is bad, then it will impact your business credit scores until your business and personal credit can be separated.

Hacks to Building Business Credit: The Credit Reporting Agencies Aren’t Right All the Time

Hacks to Building Business CreditJust the same as every organization out there, credit reporting bureaus such as Equifax and Experian are only as good as their records. If your company’s name resembles another’s, or your name is a lot like another business owner’s, there can possibly be some errors. So hack this and monitor those reports, and your business report at Dun & Bradstreet, PAYDEX.

Stay on top of these reports and dispute charges with paperwork and clear communications. Do not just allow them to stay wrong! You can resolve this! And while you’re at, it you should also be monitoring the credit reporting bureau which only deals with personal and not business credit. And that is TransUnion.

If you do not know how you can pull a credit report, do not stress. It is simple. You just use the above web links.

Hacks to Building Business Credit: Do not Let Your Credit Utilization Rate Drag Down Your Business

Credit utilization rate merely means the quantity of cash you have on credit. And it is then divided by your total available credit. Lenders normally do not want to see this go above 30%. So, for every $100 in credit, do not borrow on more than $30 of that.

If this percentage is climbing, you’ll need to spend down and satisfy your debts before borrowing more.

Hacks to Building Business Credit: The Method

Small business credit is credit in a small business’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 business.

Accordingly, an entrepreneur’s business and personal credit scores can be very different.

The Advantages

Given that business credit is distinct from individual, it helps to safeguard a business owner’s personal assets, in the event of a lawsuit or business bankruptcy.

Also, with two distinct credit scores, a business owner can get two separate cards from the same vendor. This effectively doubles buying power.

Another advantage is that even new ventures can do this. Heading to a bank for a business loan can be a formula for frustration. But building small business credit, when done right, is a plan for success.

Consumer credit scores are dependent on payments but also other factors like credit usage percentages.

But for company credit, the scores really just hinge on whether a company pays its debts timely.

Learn more here and get started with our hacks to building business credit.

The Process

Building company credit is a process, and it does not happen without effort. A company has to proactively work to develop company credit.

Nevertheless, it can be done readily and quickly, and it is much speedier than building individual credit scores.

Vendors are a big part of this process.

Performing the steps out of order will result in repetitive denials. Nobody 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 denial 100% of the time.

Business Legitimacy

A company must be bona fide to loan providers and merchants.

That’s why, a business will need a professional-looking website and e-mail address. And it needs to have website hosting from a merchant like GoDaddy.

Also, company telephone and fax numbers must have a listing on ListYourself.net.

Likewise, the business phone number should be toll-free (800 exchange or similar).

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

Licenses

These licenses all have to be in the exact, correct name of the company. And they need to have the same small business address and telephone numbers.

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

Learn more here and get started with our hacks to building business credit.

Dealing with the Internal Revenue Service

Visit the IRS website and obtain an EIN for the small business. They’re free. Choose a business entity like corporation, LLC, etc.

A business can get started as a sole proprietor. But they will more than likely want to switch to a kind of corporation or partnership.

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

A business entity will matter when it involves taxes and liability in the event of litigation. A sole proprietorship means the business owner is it when it comes to liability and tax obligations. No one else is responsible.

Sole Proprietors Take Note

If you operate a company 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. As a result, you can end up being personally accountable for all business debts.

Plus, according to the Internal Revenue Service, using this structure there is a 1 in 7 probability of an IRS audit. There is a 1 in 50 chance for corporations! Steer clear of confusion and dramatically lower the odds of an Internal Revenue Service audit simultaneously.

Starting the Business Credit Reporting Process

Begin at the D&B web site and obtain a cost-free D-U-N-S number. A D-U-N-S number is how D&B gets a business 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 company. You can do this at www.creditsuite.com/reports. 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.

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

Vendor Credit Tier

First you should build trade lines that report. This is also referred to 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 acquiring credit from the retail and cash credit tiers.

These varieties of accounts tend to be for the things bought all the time, like coffee, 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 initial credit when you have none now. Terms are generally Net 30, versus revolving.

So, if you get an 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.

Learn more here and get started with our hacks to building business credit.

Details

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 have to pay back what you borrowed or the credit you made use of.

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

Then pay back 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 vendors that will grant an approval with minimal effort. You also want 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 one time to these vendors. So, this is to confirm you are dependable and will pay in a timely manner.

Uline Shipping Supplies

Uline Shipping Supplies is a true starter vendor. You can find them online at www.uline.com. They offer shipping, packing, and industrial supplies, and they report to D&B.

You have to have a D-U-N-S number. They will request 2 references and a bank reference. The initial few orders may have to be paid in advance to first get approval for Net 30 terms.

Quill

Quill is another true starter vendor. You can find them online at www.quill.com. They sell office, packaging, and cleaning supplies, and they report to D&B and Experian.

Because Quill reports to two separate credit reporting agencies, you get two credit experiences with them. Place an initial order first unless the D&B score is established.

Commonly they will put you on a 90-day prepayment schedule. If you order items each month for 3 months, they will in most cases approve you for a Net 30 Account.

Grainger Industrial Supply

Grainger Industrial Supply is likewise a true starter vendor. www.grainger.com. They sell safety equipment, plumbing supplies, and more, and they report to D&B. You will need a business license, EIN, and a D-U-N-S number.

For under a $1000 credit limit they will approve nearly anyone with a business license.

Accounts That Don’t Report

Non-Reporting Trade Accounts can also be helpful. While you do want trade accounts to report to at least one of the CRAs, a trade account which does not report can nevertheless be of some value.

You can always ask non-reporting accounts for trade references. And credit accounts of any sort should help you to better even out business expenses, consequently making financial planning simpler. These are providers like PayPal Credit, T-Mobile, and Best Buy.

Retail Credit Tier

Once there are 5 to 8 or more vendor trade accounts reporting to at least one of the CRAs, then move to the retail credit tier. These are companies like Office Depot and Staples. These companies are more likely to have supplies you need.

Use the company’s EIN on these credit applications.

One example is Lowe’s. They report to D&B, Equifax and Business Experian. They want 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 to the fleet credit tier. These are companies like BP and Conoco. Use this credit to buy fuel, and to fix and maintain vehicles. 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 better and a 411 business telephone listing.

Shell might claim 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.

Learn more here and get started with our hacks to building business credit.

Cash Credit Tier

Have you been responsibly handling the credit you’ve up to this point? Then move to the cash credit tier. These are service providers such as Visa and MasterCard. Keep your SSN off these applications; use your EIN instead.

One example is the Fuelman MasterCard. They report to D&B and Equifax Business. They need to see a PAYDEX Score of 78 or more. 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).

Additionally, they want you to have an established small business.

These are companies such as Walmart and Dell, and also Home Depot, BP, and Racetrac. These are often MasterCard credit cards. If you have 14 trade accounts reporting, then these are feasible.

Monitor Your Business Credit

Know what is happening with your credit. Make sure it is being reported and deal with any errors as soon as possible. Get in the habit of checking credit reports and digging into the details, and not just the scores.

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

At D&B you can monitor at: www.dandb.com/credit-builder. At Experian, you can monitor your account at: www.smartbusinessreports.com/Landing/1217/. And at Equifax, you can monitor your account at: www.equifax.com/business/business-credit-monitor-small-business. Experian and Equifax cost about $19.99; D&B ranges from $49.99 to $99.99.

Update Your Information

Update the relevant information if there are inaccuracies or the information 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. And for Equifax, go here: www.equifax.com/business/small-business.

Fix Your Business Credit

So, what’s all this monitoring for? It’s to contest any mistakes in your records. Errors in your credit report(s) can be corrected. But the CRAs normally 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 corporate credit report at: www.equifax.com/business/credit-information.

Disputes

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

Fixing credit report errors also means you specifically spell out any charges you contest. Make your dispute letter as crystal clear as possible. Be specific about the issues with your report. Use certified mail so that you will have proof that you sent in your dispute.

You can dispute your company’s Equifax report here. Dispute your Experian report by following the directions here.

And you can find D & B’s PAYDEX Customer Service phone number here.

A Word about Business Credit Building

Always use credit smartly! Don’t borrow beyond what you can pay off. Keep an eye on balances and deadlines for payments. Paying promptly and fully will do more to raise business credit scores than virtually anything else.

Growing business credit pays. Good business credit scores help a small business get loans. Your loan provider knows the business can pay its financial obligations. They understand the company is for real.

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

Business credit is an asset which can help your business for many years to come.

Hacks to Building Business Credit: Takeaways

Once you know what bears upon your company credit score, you are that much nearer with our hacks to building business credit.

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