There are a lot of ways to build your business credit. But before you can do that, you need to understand what business credit is and how it works.
A strong business credit score is crucial for any business. It can help you get funding, secure lower interest rates on loans, and establish your business as a credible entity. But how do you go about building a strong business credit score? In this article, we'll walk you through the steps to take to make your business credit as strong as possible.
1. Form an LLC or Corporation
We recommend using a business name that is not the name of your company, but not a word that is likely to be searched for in the context of business. This is the most common type of business structure used. It may be the most expensive, but it is also the easiest to understand. If you choose to use a business name that does not exactly match your company name, be sure to use a business name that is not a word that is likely to be searched for in the context of business. Forming an LLC is a simple process. First, you must select a business name. Next, you need a business manager. Third, you need to file the appropriate paperwork with the secretary of state.2. obtain a business credit report
Now that you have chosen a business name, you need to determine your business credit score or BCS. This is done by obtaining a business credit report. A business credit report will show what information is available on your business. The business credit report you receive will vary between companies. You can find your report at a credit bureau such as Experian, Equifax, or TransUnion.
2. Get an EIN
An Employer Identification Number (EIN) is a unique number that companies use to identify their business. An EIN is required for almost all types of businesses, including sole proprietorships, partnerships, and corporations.
3. Get a Business Bank Account
A business bank account is a bank account that is specifically set up for your business. Get a business bank account to establish a credit history with the bank and begin the process of building business credit. Banks allow businesses to establish a credit history by using the business bank account to pay bills. They also report to the credit bureaus. Recommended: For a traditional bank account, the minimum opening deposit is $500.
4. Get a Business Phone Line
Having a business phone line is a great way to not only build your business credit, but it will also help your business stand out from other businesses in your city with a landline phone number. Lenders and customers will immediately know that your business is a real business with a business address and a business phone line. Most businesses use their personal cell phones for the business. However, doing so can lead to a credit report that will show a personal (non-business) cell phone number for your business. This can hurt your business credit.
5. Get a DUNS Number
Having your own DUNS number helps lenders find you. This number is your unique business identifier. This number is your business's unique identifier and it helps lenders and other business partners identify your company. It's free and you can get it at Duns.com. Go to Duns.com and create an account. Enter your business information and your DUNS number. Your DUNS number will be listed as "Add". You can also buy a DUNS number at Duns.com. Once you have your DUNS number, you can use it to open a business bank account or to register your company on Duns.com.
6. Establish Net 30 Vendor Accounts
A vendor account provides a degree of flexibility for businesses to provide services to customers on a recurring basis.,A key benefit of a vendor account is that it automates the payment process. Vendor accounts are typically set up to provide automatic payments to vendors via online payment processors. This means you don't have to worry about manually entering payments and making changes to your account on a monthly basis. Typically, vendors are paid Net 30, meaning they are paid after the first 30 days. The first payment is usually made after the first day of the month. Some financial institutions will actually put the payment terms on an account statement but they typically won't. Typically, a 30-day payment period is all that is required. So in the end, your payment date is really only 30 days away.
7. Get a Business Credit Card
A business credit card is a type of credit card that is specifically designed for businesses and is meant to be used for business expenses. All business credit cards are secured by your business's checking account. Once you have established a good relationship with your bank, you may use your checking account as the default form of payment for your business credit card. If your business credit card is unsecured, it is considered to be a business credit risk. That means it is more likely you will receive a lower rate, and your interest rates are more likely to be variable. If you are approved for a business credit card, it is recommended you set up automatic payments to help you avoid missing payments, and it is also recommended you pay your balance on time each month. Business credit cards are usually offered by banks, but there are also third-party lenders that specialize in offering business credit cards. Recommended: Discover is a great option for businesses.
8. Apply for In-Store Credit Cards
In-store credit cards can be a great way to spur sales and expand your business. An in-store credit card can be used in-store, online, or for business services like shipping and accounting. You can add your business as an authorized user in the store and use the card in-store. This gives you control over your business credit and helps you build business credit. You can also use the card online or for business services like shipping and accounting. It's a convenient way to expand your business and safely build business credit.
9. Pull Your Business Credit Reports After 6 Months
That's where business credit comes in. It's a way for small businesses to establish themselves as credit-worthy borrowers, without putting up their own assets as collateral.
There are a lot of ways to build your business credit. But before you can do that, you need to understand what business credit is and how it works. In this article, we'll walk you through everything you need to know about business credit: from the basics to building your credit score, to using it to get financing for your business.
Once you've been in business a while, the amount of time you've been in business is added to your business credit report. This helps creditors get a better understanding of your business's stability. While the longer you've been in business, the better, 6 months is a good benchmark.