Over 90% of business owners have never taking the time to build business credit. The reason why I have chosen to open this article with this statement is for two reasons. #1 to give comfort to those who have not taken the time to establish business. From this statement you can see that you are not alone. #2 To help ones understand that if they take this seriously, and take the time and energy to establish business credit, any one can, then they will enter the elite small group of business owners who have a tremendous edge on their competition because they can leverage themselves financially in a way that their competitors cannot.
A road map outlined by experts.
You must separate your business credit from your personal credit. In
order to do this you must set up either a corporation or an LLC. If you
are a sole proprietorship or a partnership you are 100% responsible for
any money that you borrow perhaps you have herd of personal
guarantor.Your business must have an EIN #, and in no way should your
business be connected to your social security #. Your business should
open a banking account that is not linked to your personal account in
any way. Be sure that the account has the correct business name. Your
business should also have a business phone # that is separate from your
personal Phone #, and it should be listed with your local phone company
as a business, and be in a 411 directory.Once you have set up this
foundation the next step is to make sure your business is registered
with the following credit bureau's and have an open file with all three
of them. Eqiifax, Experian, and Dun & Bradstreet.
Your business must establish one bank loan, 3 business credit cards and 5
vender trade lines of credit that all report to these three credit
bureau's. A few things I thought it might be appropriate to point out at
this time is. #1 Business credit is not a substitute for personal
credit. Both should be worked on and maintained and will have a bearing
on haw much you will be able to receive from lending institutions,often
lending institutions will in addition to looking at the business credit,
look at the personal credit worthiness of the corporate officers or
principles of a corporation or LLC. If you have bad personal credit work
on it at the same time you are building business credit. #2 I have
personally seen companies extended large sums of money who had a good
credit score and report with Dun & Bradstreet without giving much
bearing to other sources, the point I' am trying to make here is, make
sure that whoever's reporting on your behalf reports to all three, and
specifically these three.# 3 Business cre
Why credit cards are the key.
In essence your business has to establish a credit history. Again
reflecting on our road map of 3 credit cards 1 bank loan and 5 vender
trade lines, each time we attain one of these elements it will be easier
to attain the next.
If we do not qualify for a unsecured credit card it is relatively easy
to get a secured credit card provided we have a small sum of money that
we can deposit into an account as collateral on our credit limit for the
newly acquired credit card. Once we have our credit card it will be
easier to get vendors to extend us a 30 or 60 or 90 day line of credit
provided that we allow them to keep our credit card on file. After we
have paid on our secured credit card for a little while our bank will
make it an unsecured credit card. Once this happens it is often much
easier to get another issuing bank to give you an unsecured credit card
as they can see that your business has established a measure of
credibility. At this point things can move forward in a timely fashion
and before you know it you have every thing on the road map to success.
Once you have reached this point a few things to remember are #1 keep
your credit card balances bellow 50% of your total available credit as
this will reflect well on your credit score.