How to Build Good Business Credit

 If you want to start and own a business, you need to consider building good business credit and learning how to maintain it. You then will be able to borrow money against the business without getting into your personal savings or using your own credit. You will have less risk and you can keep personal credit separate and protected.

If you have poor personal credit, you are able to build a corporate structure that allows you to build an immaculate credit profile for your business. You will be able to get loans, credit cards, and business lines of credit that you probably would not be able to receive as an individual.

There are some strategic steps that you have to follow to ensure that you initial a great start toward acquiring business credit:

1. Incorporate or Form a Limited Liability Corporation (LLC) – Take the appropriate steps to set up an LLC. Get the required occupational licenses. You will be able to build a business credit profile with your LLC and business license. 

2. Acquire a Federal Employer Identification Number (FEIN) – you can do this by going to www.IRS.gov to apply for one.

3. Open a Business Bank Account – Make sure it is separate from your personal bank account.

4. Get a D-U-N-S Number - This is a 9-digit number that Dun & Bradstreet issues to business owners in order to make credit history verification easier and more accessible. 

5. Complying to the rules – You must obtain any business licenses or permits that are required for your jurisdiction. 

6. Obtain a Business Phone Line and possible Yellow Pages Listing – Get your business listed in your local and/or online phone directory. Be sure the phone line is listed in your business name and not your personal name.

7. The same Business Address on everything – Make sure that the business address is on everything such as your DNS number, phone directory listing, business licenses, permit and business credit card that you will be applying for. 

8. Start applying to Business Creditors – Start to borrow or purchase products and services from other businesses that will report to the credit bureaus like Experian and Dunn and Bradstreet. Your business income potential plays a large role in your business credit scores.  The higher FICO scores usually go to more stable businesses. However, they started small, didnt they? After some time, your business FICO scores will increase as well. When you are applying for credit, make sure you seek out vendors that dont require long periods of established business, personal credit checks or any guarantees. It is after you have conducted business with these vendors on credit that you are able to use the vendors as your very own credit references and start building your credit profile with the credit bureaus.