How to make sure your business credit cards don’t report on your consumer credit reports

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How to make sure your business credit cards don’t report on your consumer credit reports

Published By Janet Gershen-Siegel at September 26, 2017


When you consider the difference between your business credit score vs personal credit score, remember that any inquiries into your personal credit score are going to negatively affect that score. And a lot of merchants and lenders will perform inquiries when they are doing business with you for the first time. You do not want their inquiries to affect your personal credit.

Get a DUNS number

You can’t get into Dun & Bradstreet’s system without one, and they are free, anyway. A DUNS number differentiates your business from all others, including similarly-named companies. Dun & Bradstreet has a prerequisite that you register your small business on their site before they will hand out a DUNS number. Please note: there are a few slightly different methods of getting a DUNS if your business belongs to a particular class. These include if your small business is a US government contractor or grantee, or your company is Canadian,or you are working as an Apple developer.

File a DBA

If you operate your business as a sole proprietor at least file for DBA (‘ doing business as’) status. If you do not, then your personal name will ends up being the same as your company name. As a result, you can still end up being personally liable for all your business debts. Plus, according to the Internal Revenue Service, with this structure you have a 1 in 7 chance of an IRS audit. This is in contrast to a 1 in 50 chance for incorporated businesses! Avoid confusion with this step, and you can substantially reduce your chances of an IRS audit. And who doesn’t want that?

Go beyond a DBA and make your business as a distinct legal entity by way of incorporation

Get together with your tax advisor or financial planner in order to decide on which legal entity (sole proprietor, LLC or S-Corp) will best fit your small business and particular financial situation. Incorporation can also help to safeguard your personal assets in the event of a lawsuit. Once your corporation or LLC is registered on your state’s Secretary of State’s website, you can then get a Business Federal Tax ID Number, so you can open your business’s bank account.

Get an EIN (Employment Identification Number, AKA a TIN, or Tax ID Number).

The IRS makes it simple to do this. You can apply online as soon as you determine your eligibility.

  • Is your main business based in the United States or in U.S. Territories?
  • Does the person who is applying have a valid Taxpayer Identification Number (SSN [Social Security Number], EIN, or ITIN [Individual Taxpayer Identification Number]?

If so, then you can proceed.

Start business checking and savings accounts

Have a talk with your neighborhood bank about getting business checking and other accounts. If you have been a dependable client on the personal side of things, and you can show your small business is paying its invoices on time, then your bank is going to be a lot happier loaning to your small business.

Apply for appropriate bills through your small business.

These are truly any invoices which are the direct responsibility of your company (or, at least, they should be). These consist of everything from Wi-Fi in your business’s name to the rent or a mortgage for your office space. Your business might pay a cell phone provider or even the oil or gas bill, if that is appropriate. Your business will notice credit scores rise as you pay the bills on time.

Enhance the professionalism of your small business and keep your individual and company credit separated.

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