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How You Can Build Business Credit Fast

Published By Janet Gershen-Siegel at April 5th, 2018

Learn Exactly How You Can Build Business Credit Fast

Do you know how you can build business credit fast? Building small business credit means that your business acquires chances you never believed you would.

Small business credit is credit in a business’s name. It doesn’t link to an entrepreneur’s consumer credit, not even if the owner is a sole proprietor and the only employee of the company.

As a result, a business owner’s business and personal credit scores can be very different. So here’s how you can build business credit fast.

You Can Build Business Credit Fast: The Advantages

Because small business credit is distinct from individual, it helps to safeguard a small business owner’s personal assets, in case of court action or business bankruptcy.

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

Another benefit is that even startup businesses can do this. Heading to a bank for a business loan can be a recipe for disappointment. But building business credit, when done properly, is a plan for success.

Personal credit scores are dependent on payments but also various other elements like credit usage percentages.

But for business credit, the scores actually just depend on whether a small business pays its invoices punctually.

You Can Build Business Credit Fast: The Process

Establishing small business credit is a process, and it does not occur without effort. A business will need to proactively work to build company credit.

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

Vendors are a big component of this process.

Accomplishing the steps out of sequence 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 denial 100% of the time.

You Can Build Business Credit Fast: Start with Business Fundability

A company needs to be fundable to lenders and merchants.

For that reason, a company will need a professional-looking web site and e-mail address. And it needs to have website hosting from a supplier such as GoDaddy.

Additionally, company telephone and fax numbers ought to have a listing on ListYourself.net.

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

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

Licenses

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

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

You Can Build Business Credit Fast Credit Suite

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

You Can Build Business Credit Fast: Start Dealing with the IRS

Visit the Internal Revenue Service web site and obtain an EIN for the company. They’re free of charge. Choose a business entity such as corporation, LLC, etc.

A small business can begin as a sole proprietor. But they will probably wish to change to a kind of corporation or an LLC.

This is in order to minimize risk. And it will optimize tax benefits.

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

Sole Proprietors Take Note

If you run a 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 company name. As a result, you can end up being directly liable for all small business debts.

And also, according to the Internal Revenue Service, 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 substantially decrease the chances of an Internal Revenue Service audit at the same time.

You Can Build Business Credit Fast: Beginning the 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 in 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 web sites for the 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.

This way, Experian and Equifax will have activity to report on.

Vendor Credit Tier

First you need to establish 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 begin to get credit in the retail and cash credit tiers.

These kinds of accounts 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 to start with, what is trade credit? These trade lines are credit issuers who will give you preliminary credit when you have none now. Terms are often Net 30, rather than revolving.

So, 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.

Details

Net 30 accounts need to be paid in full within 30 days. 60 accounts have to be paid in full within 60 days. In contrast to 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 kick off your business credit profile the right way, you ought to get approval for vendor accounts that report to the business credit reporting agencies. When 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 like true starter credit can. These are vendors that will grant an approval with nominal 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 once to these vendors. So, this is to prove you are reliable and will pay promptly. Here are some stellar choices from us: https://www.creditsuite.com/blog/5-vendor-accounts-that-build-your-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 to the retail credit tier. These are companies like Office Depot and Staples.

Just use your Social Security Number and date of birth on these applications for verification purposes. For credit checks and guarantees, use the business’s EIN on these credit applications.

One such 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 progress to the fleet credit tier. These are businesses like BP and Conoco. Use this credit to purchase fuel, and to repair, 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 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 claim they want a specific amount of time in business or revenue. But if you already have adequate vendor accounts, that won’t be necessary. And you can still get an approval.

You Can Build Business Credit Fast Credit Suite

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

Cash Credit Tier

Have you been sensibly managing the credit you’ve gotten up to this point? Then progress to the cash credit tier. These are service providers like Visa and MasterCard. Only use your SSN and date of birth on these applications for verification purposes. For credit checks and guarantees, use your EIN instead.

One such example is the Fuelman MasterCard. They report to D&B and Equifax Business. They need 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).

Plus, they want you to have an established business.

These are service providers like Walmart and Dell, and also Home Depot, BP, and Racetrac. These are normally MasterCard credit cards. If you have 14 trade accounts reporting, then these are in reach.

You Can Build Business Credit Fast Credit Suite

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

You Can Build Business Credit Fast: Monitor Your Business Credit

Know what is happening with your credit. Make sure it is being reported and deal with any mistakes as soon as possible. Get in the practice 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.

At Equifax, you can monitor your account at: www.equifax.com/business/business-credit-monitor-small-business. Equifax costs about $19.99.

Update Your Records

Update the information if there are errors 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. So for Equifax, go here: www.equifax.com/business/small-business.

You Can Build Business Credit Fast: Fix Your Business Credit

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

Disputes

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

Establish Business Credit Fast Credit Suite

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

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

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

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

You Can Build Business Credit Fast: A Word

Always use credit sensibly! Don’t borrow beyond what you can pay off. Keep an eye on balances and deadlines for payments. Paying on schedule and in full will do more to raise business credit scores than nearly anything else.

Building business credit pays off. Good business credit scores help a small business get loans. Your loan provider knows the business can pay its debts. They recognize the company is authentic.

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

You Can Build Business Credit Fast: Takeaways

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

 

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