Credit Suite Blog

Get current information on getting credit and loans to grow your business

CLICK HERE TO LEARN MORE

Learn How to Build Credit – The Professional Difference

Published By Janet Gershen-Siegel at October 28th, 2017

Learn How to Build Credit – The Professional Difference

It’s Time to Learn How to Build Credit

Building business credit means that your company gets chances you never felt that you would. You can get new equipment, bid on real property, and cover the company payroll. And you can do this even when times are a bit lean. This is specifically helpful in seasonal companies, where you can go for months with only minimal sales.

Because of this, you should focus on building your business credit. Increase and sustain your 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 business owner wants that. You need to know what affects your business credit before you can make it better.

Learn How to Build Credit: Your Payment History is Essential

Overdue payments will bear upon your business credit score for a good seven years. If you pay your business (and personal) financial obligations off, as fast as feasible and as completely as possible, know what happens? You can make a very real difference when it concerns your credit scores.

See to it to pay on schedule and you will reap the rewards of promptness.

Learn How to Build Credit: The Credit Reporting Agencies Can Just Plain Get It Wrong

Just the same as each company around, credit reporting agencies like Equifax and Experian are only as good as their records. If your company’s full name resembles another’s, or your full name is a lot like another business owner’s, there can potentially be some mistakes.

So 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 keeping an eye on the credit reporting agency which only handles personal and not business credit, TransUnion. If you do not know the way to request a credit report, do not stress. It is simple – just use the above links.

1231761  Content Updated CklistNotRec Bk Banner op2 111121 min - Learn How to Build Credit – The Professional Difference

Learn How to Build Credit: The Method

Small business credit is credit in a company’s name. It doesn’t tie to an entrepreneur’s individual credit, not even when the owner is a sole proprietor and the sole employee of the small business.

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

The Advantages

Since business credit is independent from individual, it helps to secure an entrepreneur’s personal assets, in case of court action or business insolvency.

Also, with two separate credit scores, an entrepreneur can get two different cards from the same vendor. This effectively doubles purchasing power.

Another benefit is that even startup ventures can do this. Visiting a bank for a business loan can be a formula for frustration. But building company credit, when done properly, is a plan for success.

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

But for company credit, the scores truly only hinge on if a company pays its bills punctually.

The Process

Growing company credit is a process, and it does not occur without effort. A small business must actively work to establish business credit.

That being said, it can be done readily and quickly, and it is much more efficient than developing individual credit scores.

Vendors are a big aspect of this process.

Carrying out the steps out of sequence will lead to repetitive denials. Nobody can start at the top with small business credit. 

Small Business Fundability™

A company needs to be Fundable to lenders and merchants.

Due to this fact, a small business will need a professional-looking website and e-mail address. And it needs to have website hosting from a company like GoDaddy.

And also, business telephone numbers ought to have a listing on 411, which you can get via ListYourself.net.

At the same time, the business telephone number should be toll-free (800 exchange or comparable).

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

Licenses

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

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

Working with the IRS

Visit the IRS web site and get an EIN for the company. They’re free of charge. Pick a business entity such as corporation, LLC, etc.

A small business can get started as a sole proprietor. But they will most likely wish to switch to a type of corporation or partnership.

This is in order to decrease risk. And it will make best use of tax benefits.

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

Kicking Off the Business Credit Reporting Process

Start at the D&B website and get a totally 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 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.

By doing this, 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 more credit.

These kinds of accounts tend to be for the things bought all the time, like 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 starter credit when you have none now. Terms are usually Net 30, instead of revolving.

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

Details

Net 30 accounts must be paid in full within 30 days. 60 accounts have to be paid completely within 60 days. Compared 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 launch your business credit profile the right way, you ought to get approval for vendor accounts that report to the business credit reporting bureaus. Once that’s done, you can then make use of the credit.

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

Vendor Credit – It Helps

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

You want 3 of these to move onto the next step.

1231761  Content Updated CklistNotRec Bk Banner op2 111121 min - Learn How to Build Credit – The Professional Difference

Monitor Your Business Credit

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

We can help you monitor business credit at Experian, Equifax, and D&B for 90% less than it would cost you at the CRAs.

Fix Your Business Credit

So, what’s all this monitoring for? It’s to challenge any mistakes in your records. Mistakes in your credit report(s) can be taken care of. But the CRAs typically want you to dispute in a particular way.

Get your company’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 mistakes normally means you specifically itemize any charges you dispute.

1231761  Content Updated CklistNotRec Bk Banner op2 111121 min - Learn How to Build Credit – The Professional Difference

A Word about Business Credit Building

Always use credit smartly! Don’t borrow more than what you can pay off. Keep track of balances and deadlines for repayments. Paying promptly and in full will do more to increase business credit scores than virtually anything else.

Growing company credit pays off. Excellent business credit scores help a small business get loans. Your loan provider knows the business can pay its financial obligations. They recognize the company is bona fide.

The small business’s EIN links to high scores and lenders won’t feel the need to require a personal guarantee.

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

Learn How to Build Credit: Takeaways

Once you know what influences your business credit score, you are that much closer to building better business credit. Discovery a new way to learn how to build credit.

Leave a Reply

Your email address will not be published.