Building Business Credit
It can be an overwhelming experience especially if you have limited support, funding and tools at your disposal. Whether you have a product or service to bring to the marketplace careful planning and execution can greatly improve the success of your new venture.
To help you in your preparation I have assembled my top 25 business credit building rules which can greatly improve your ability in obtaining the credit your company needs.
- Select the proper entity structure that best serves the needs of your business.
- Choose a business name that does not trigger red flags with the business credit bureaus.
- Assemble a winning financial team that understands the nature of your business and its vision.
- Avoid selecting a high risk SIC and NAICS classification code for your company.
- Do not use a P.O. Box as your business address. However, a P.O. Box for your business mailing address is acceptable.
- Verify that your business is 411 listed prior to applying for credit.
- Always use the same exact company information when completing registrations, applications and documents.
- Have a fully functional company website before applying for credit. Parked domains and web sites under construction are immediate red flags.
- Do not use a free email account for your company email address.
- Establish a “low 5” bank rating as soon as possible in order to build bank credit.
- Obtain diverse credit account types in order to establish a strong business credit profile.
- Pay invoices 10, 15 or 20 days ahead of the due date.
- Use your credit on a consistent basis in order to establish good payment history.
- Keep debt to credit limit ratios at no more than 30% in order to minimize your company’s debt exposure
- Utilize all credit types (business credit cards, business charge cards, business debit cards, prepaid business credit cards etc.) to your advantage as each one serves a unique purpose.
- Use secured credit cards in order to start building business credit for your company.
- Start a personal credit recovery plan if you have less than perfect credit.
- If you process credit card transactions every month consider using a merchant card in order to access cash at your convenience.
- Extend credit to consumer and business customers and increase sales by as much as 50%.
- Report the payment experience of your business customers to the business credit bureaus.
- Get your company listed with the major business credit bureaus.
- Establish a reporting bank loan on your company credit profile.
- Create a complete and sound business plan.
- Monitor your business credit profiles.
- Add positive trade references to your file through DNB’s trade reference builder program.
Let these rules serve as a helpful guide as you strive towards your goals of obtaining the financing your company needs.
Ready to access a step-by-step business credit building system? Become a member of my Business Credit Insiders Circle and gain access to a proven step-by-step business credit building system. A system that provides you access to vendor lines of credit, fleet cards, business credit cards with and without a PG, funding sources and lenders that report to all the major business credit bureaus. Submit your name and email below for details and receive a free audio seminar ($597 value) =>
Marco Carbajo is a business credit expert, author, speaker, and founder of the Business Credit Insiders Circle. A business credit membership helping business owners build small business credit. He is a business credit blogger for AllBusiness.com, a subsidiary of Dun and Bradstreet and author of “Eight Steps to Ultimate Business Credit” and “How to Build Business Credit with No Personal Guarantee.” His articles and blogs have also been featured in American Express Small Business, Business Week, The Washington Post, The San Francisco Tribune, Scotsman Guide, Alltop, Entrepreneur Connect, and Active Rain.