Building your business credit

This is the Part 2 continued from our other post ” Importance of Business Credit ”

Business credit is important because it separates your personal credit from your business. When you apply for a credit card, you’ll typically use your social security number to verify your identity. Managing your business credit is a little similar but instead of your social security number– you’ll use your business EIN. That way you can keep your business credit separate from your personal. The way to build your business credit is to contact the 4 major business reporting companies: Experian, Equifax, Dun& Bradstreet and TransUnion. You’ll want to open a business credit file with them.

Note: Dun & Bradstreet has a paid service that helps create your file here

After you have your business credit file opened, You’ll need to open a business credit card with your business banking institution. Typically, they’ll look at your business bank account balance – so make sure there’s a substantial amount in there. Chances are you’re going to get a lower limit, but it’ll be your chance to start building your credit profile up. If you have any vendors that you work with on NET 30 terms, you’ll want to check if they report on top payments for you.

When your business credit is in good standing, many times you can receive credit without a personal credit check. Your business can qualify for many revolving store credit cards which can be a lifeline when cash flow is low. Starting your business credit profile is the first step to increasing your credit lines. After your profile has been well established, Banks may match your personal credit line – thus giving you double purchasing power. But remember,  You’ll want to open your line of credit without any personal liability. Otherwise, your personal credit will still be affected.

Business credit scores are judged a little differently, instead of taking into consideration account age, revolving credit and others. A business can grow their business credit score much faster because it’s only based on Payment history. On time payments will be the biggest factor in making sure your business credit profile improves.

Keep in mind, once you start your business credit – you’ll be able to easily get approved for business credit accounts. Without having to show your personal credit history or sign a personal guarantee – your personal assets are safe.

Our company has over 100 years of industry experience and would be happy to offer our expertise. You can reach out to me at Edward.Shi@providencecapitalfunding.com or give us a call at 1(800) 341-1288