Do I Build Business Credit
In a recent post for the Small Business Administration (SBA) I covered five key reasons to start building business credit for your startup or existing business. If you have been following my blog for some time I know we’ve talked about this at length, but there have been a few additions recently, I thought you may find helpful. 
When it comes to building credit in your company’s name, Marc Kirshbaum, president of Experian’s Business Information Solutions group says “Just as your personal credit has a big impact on your financial health, your business credit can help you get competitive business loan rates and terms from potential suppliers.”
Let’s recap the five key reasons:
Business Credit Reports – According to Creditera, in the first 6 months of 2013, Dun & Bradstreet had 45 million business credit report requests and Equifax Commercial had 35 million. It’s clear that suppliers and lenders conduct business credit checks. If your business does not build its own credit then your personal credit will always play a major role in credit granting decisions for your company.
Bidding on local, state and government contracts – If a company wants to do business with government agencies it’s required to register as a Federal Contractor. Part of that process is to obtain a Dun & Bradstreet D-U-N-S® Number. Getting D-U-N-S® Registered™ is the first step to getting listed with Dun & Bradstreet. The next step is to add trade lines by either doing business with trade reporters or adding your own trade references.
Separate Personal and Business Credit – In the article I mention the opportunity you have to build a credit file for your company. As you know keeping your business expenses completely separate is essential to protecting the integrity of the corporate veil.
Protect Your Personal Credit – The fact is creditworthy businesses get more financing opportunities, higher credit limits, better rates and more favorable terms. With business credit you protect your personal credit from being impacted by your company’s revolving debt.
For example, let’s say you used a credit card to purchase $10k worth of equipment for your business. If this card reports to your personal credit then your FICO® scores would be impacted since this affects your credit utilization ratio. Using a business credit card that reports only to your business credit protects your personal credit from being impacted by your business.
Credit Opportunities – In the article I talk about how potential business partners and investors use business credit checks to find out more about a business. But don’t forget the credit opportunities you’ll receive via the mail or phone by having strong business credit reports. Many suppliers, lenders and credit card issuers identify potential business customers (prescreened offers) to offer their financial products to based on business credit reports.
According to the 2012 NSBA Small Business Access to Capital Study, 20% of small business loans are denied due to business credit. Remember, your business credit history acts as your credit reference. If you have no business credit history, you have no credit references, and a lender or supplier has no idea how to assess your company’s creditworthiness.
Read more about the 5 Key Reasons to Get Started Building Business Credit
Ready to start the business credit building process? 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 business credit building audio seminar ($597 value) =>
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About the author
Marco Carbajo is a business credit expert, author, speaker, and founder of the Business Credit Insiders Circle. He is a business credit blogger for Dun and Bradstreet Credibility Corp, the SBA.gov Community, About.com and All Business.com. His articles and blog; Business Credit Blogger.com, have been featured in ‘Fox Small Business’,’American Express Small Business’, ‘Business Week’, ‘The Washington Post’, ‘The New York Times’, ‘The San Francisco Tribune’,‘Alltop’, and ‘Entrepreneur Connect’.