Easiest steps to build business credit.
These days there is a need to learn the steps needed to develop business credit in the right and appropriate way. You may have already taken care of some of these, but you’ll want to make sure each one is checked off and you update yourself according to these.
1. Intact your business on the map.
If you haven’t done so yet, you’ll need to develop your business as a separate legal entity with your state. That means either amalgamating or setting up an LLC or S-Corp. Next, you’ll want to apply for an Employee Identification Number that is EIN through the IRS website.
2. Unlock a business bank account.
This will help you clearly differentiate your personal and business financials. Use this account to take care of all business expenses that encapsulates paying yourself by depositing into a personal account. If you apply for financing, most lenders will want to check your business account bank data to help them make the decision.
3. Receive a business phone number.
You can use a cell phone, VoIP, or a landline, but you need to have an individual phone number for your business. Make sure the number is listed, so it can be found in the easiest manner.
4. Check to view if you have a D-U-N-S number.
Once your business is legally developed, you should check to see if it’s listed with Dun and Bradstreet. They are one of the major credit bureaus, and its PAYDEX score is used in most trade credit applications. If D and B don’t have a file for you, you can register for a D-U-N-S number for without any charge.
5. Look up carefully the Experian and Equifax credit files.
Besides Dun & Bradstreet, Experian and Equifax are the other two important business credit bureaus. Lenders tend to utilize Experian and Equifax data when making decisions. Unlike D and B, you can’t manually register with Experian and Equifax to build out your profile in an effective manner. They do it automatically by pulling information from public records and the information is sent in by your business creditors and lenders. It’s is quite like to how your personal credit profile gets populated.
6. Receive a line of credit with vendors or suppliers.
You may already have some of these relationships developed. Think about the companies you do business with every day, like Home Depot, Staples, Office Depot, UPS, FedEx, and many others. Ask them to increase a small amount of credit; most will, they want to maintain you as a customer. Just be sure you check that they send your payment history to the business credit bureaus. It’s reported with consent. Ideally, you’ll develop four or five of these types of accounts to help fill in your business credit profile.
7. Unlock a business credit card.
If you’ve been utilizing a personal credit card to pay for business expenses, now’s the time to put a halt. You should open a couple of business credit cards that are not connected to you personally. You’ll need to check that they report to the business bureaus when applying. Most business cards will encapsulate travel points or cash back programs it means that you can utilize money to reinvest into your business.
8. Pay your bills on time and as early as possible.
Apart from personal credit, where you have thirty days to make a payment before it lowers your credit, your business credit scores can take a hit even if you are one day late. In fact, the only way to get a perfect “100” D and B PAYDEX score is by paying your bills before payment date comes.