Why and How to Build Your Business Credit
A positive credit history can make or break your future borrowing potential. Your past payment habits can have a direct affect on whether your company sinks or swims. If your goal is to increase your ROI, grow as a business, and compete in your industry, building and maintaining a high business credit score is a must.
How can you start? There are three methods that can quickly build your business credit:
Formally setting up your business
Opening business accounts
Make payments with credit and taking loans out when necessary, making sure to pay off your monthly minimum and interest.
Establishing a Credit History
Establishing a credit history for your business is possible only if you define your business as separate from your personal finances. By creating this business-oriented credit history, you also publicly identify your role in the marketing community.
The best way to do so is to start by:
Incorporating your business as a separate legal entity, such as a corporation or limited liability company. Set up an Employer Identification Number (EIN) through the Internal Revenue Service.
Register your business with the Dun & Bradstreet Corporation, a business credit bureau that will assign you a DUNS number and add you to a database of millions of businesses so your credit history can be tracked and viewed by the general public.
Using your EIN and DUNS numbers, open a business checking and savings account.
Apply for a secured credit card for use on small, business-related purchases. These cards require a deposit to open and boasts a low credit limit. If your credit history is short or adverse, these cards are available to you and can be used to build up your credit over time.
By completing these steps, you invest in the financial success of your business, building a firm credit foundation on which to grow. Once your business is established with an incorporated name and you have an EIN, DUNS, and business bank accounts, you can demonstrate your creditworthiness to vendors, investors, business partners, and lenders through your purchases. Have questions? Contact Express Capital Financing, today!