Building Business Credit Fast
Advantages of Business Credit
There are many advantages to building business credit. To double the borrowing ability, you can build credit in a credit profile that is separate from your business’s predict profile. This is more beneficial than consumer credit, as it has much higher credit limits and capacity. You can build business credit very quickly (30-90 days from the initial profile set-up), and it can be done without a personal credit check. Regardless of personal credit quality, one can build business credit without personal credit reporting of business accounts. Credit can usually be obtained without the owner having liability. This means that personal assets cannot be pursued. Another advantage of business credit: it increases credibility. Since credit reports are public, prospects, clients, lenders, competitors, credit issuers, or someone interested in purchasing your company can view and confirm your credibility. Business credit can be obtained by almost any company if they have an entity setup and EIN. Neither collateral nor financials are necessary to build business credit. Startup businesses can also build business credit if they follow the correct steps.
Types of Business Credit
Building An Initial Business Credit Profile in Three Steps
A new business builds credit the same way that a consumer does. A business starting with no credit profile gets approved for a new credit profile. The business uses credit and pays back the credit in a timely manner. The credit reports to reporting agencies. The credit being paid back on time establishes positive business credit, and the business then qualifies for more credit to use.
Any entity type can be used to build business credit. First, make your business a separate legal entity to ensure your business credit is separate from your personal credit. This means that your business cannot be a sole proprietor or partnership. You do not have a true business unless you have a separate business entity (LLC or Corporation). While other entities do not, these entities eliminate your personal liability.
Name of your Business
Federal Tax ID Number
The Address of your Business
Dedicated Business Phone Number
Another essential item that vendors look for when considering approval of business credit is the business’s phone number. A dedicated phone number with a 411-directory assistance is required. It should not be a home or personal cell phone number. It must be under the business name. It should have an 800 number as well as a fax number. Voice Over IP numbers are acceptable as long as you do not use a home or cell number. Go to ListYourself.net to register with 411.
When considering approval, credit providers research the companies they are approving. Therefore, it is essential to have a professional website where they can learn everything they need to know about your company. A professional email is also necessary and is inexpensive and simple to create. An example of an address: firstname.lastname@example.org. A company lacking either of these items appears unprofessional and uncredible.
Required Licenses and Permits
Before applying, contact your State, County, and City Government offices to determine whether you need any type of license or permit for your business. Do not apply until your company is appropriately licensed.
Check Business Listings
Purchasing from Dun & Bradstreet
To begin building a Dun & Bradstreet credit profile, you can obtain a Dun & Bradstreet number (D-U-N-S #). Your number will help enable your business to borrow without a personal guarantor (free at http://www.dnb.com/). You can enroll for the DNBi SelfMonitor to keep track of your credit while you are building it. This costs $39-$99/month. You can also buy a package from them for $2,000.
Purchasing from Experian Commercial
You can purchase a report from Experian for $49-$99 at http://www.smartbusinessreports.com/. You can also view recent inquiries, check to see if you have an active Experian Business Profile, view how many trade lines are reporting, and check to see if you have a business credit score assigned yet.
Purchasing from Equifax Commercial
Reading and Understanding Credit Reports
Personal Credit Scores: Based on 5 Factors
Paydex Score - Dun & Bradstreet
Credit Reports List
A Business Credit Reports list includes many items in great detail. They include each payment made on every individual account, upper credit limit, the amount owed on each individual business account, a full payment record, payments and amounts past due, the terms of the account, the last time the account was updated and reported, each account’s payment details, working capital, current assets, net worth, liabilities, and sales. Reports also provide detailed commentary on payment patterns. These reports are set up very differently from consumer reports, so it is important to examine them carefully to accurately assess your business risk.
Starting with Vendor Accounts
Initial Credit from Vendors
Starter Vendors Vendors :