Start Building Business Credit Fast
What’s the best way to start building business credit fast?
If you want to start off fast and build your business credit file as soon as possible then this post is for you. We are going to cover five proven ways to establish credit in your company’s name while protecting your personal credit at the same time.
So, whether you need access to working capital, accept credit card payments, conserve cash flow or manage fuel costs; you can start building business credit fast with each one of these.
First, before you take action you will want to set up a separate legal entity for your business. Secondly, obtain an employer identification number (EIN) which is not only used for tax filing but also to establish a unique credit identity for your business.
It’s also crucial that your company is ‘credit ready’ meaning that it meets the standard requirements that banks, lenders, suppliers, retailers and vendors use as part of their credit decision making process.
By the way you can find more details on lender compliance in our post ‘How to Build Business Credit Step by Step’.
Here are 5 ways to start building business credit fast:
1) Switch to Processing Fee Reporting – If you accept credit card payments from customers than why not switch to a merchant processor that builds your business credit? With processing fee reporting your business can build its credit profile each time it accepts a credit card payment from a customer.
Processing fees are fees that a merchant account provider charges for their services. Typically, these fees are a percentage of each credit card transaction plus a per-transaction fee for specific types of charges.
What’s important to realize is if you accept credit card payments from customers you already pay processing fees to your merchant account provider. You just don’t benefit from your timely payments to the processor reporting to your company’s business credit profile.
By switching to a merchant provider that has processing fee reporting you benefit from something your business is already doing. CLICK HERE for more details on how to get processing fee reporting.
2) Get Business Credit Building Cards – Be sure to check out a recent post where we covered the ‘5 Key Factors to Know Before You Get a Business Credit Card’. The number one factor we discussed is not all business credit cards build your business credit.
Now there are card issuers such as American Express that report payment activity to both consumer and business credit agencies but it still impacts your personal credit.
The funding process takes 14-20 days with each card being issued in your company’s name. This will enable you to establish 4-5 positive accounts only reporting to your company’s credit profile not personal credit. As a result, your business will have its own credit identity and business credit rating built.
3) Utilize Vendor Lines of Credit – With a vendor line of credit you have the ability to purchase products or services for your business with net 30-day terms. This helps conserve cash flow and establish a positive trade reference for the business.
Vendor credit is by far one of the easiest forms of business credit to obtain since the majority of vendors do not require a personal credit check and have minimal requirements for approval.
Although you have over 500,000 vendors across the country willing to extend credit terms to businesses like yours not all report payment activity to business credit reporting agencies. In fact, less than 6,000 actually share payment data with a business credit agency.
For more details and sources, be sure to check out our post on net 30 companies that report to the business credit reporting agencies. For a complete list of vendors that report check out our business credit building system.
4) Acquire Retail Business Card Accounts – Major retailers such as Best Buy, Staples, Home Depot, Lowes, Costco, and Sears to name a few offer business card accounts to small businesses. Retail business card accounts work like a traditional credit card with the main difference being that it can be used only at the issuing retailer.
The good news is business card accounts are easier to qualify for compared to business credit cards and may come with various benefits such as discounts off of purchases from the retailer. Where you may want to be careful is the interest rates are higher so it’s best to pay your balance in full to avoid interest charges.
Keep in mind, in order to qualify for business accounts with major retailers it’s important that your business already have its credit profile and scores established. The majority of all major retailers require several trade references on their business credit applications and will check your company’s credit file as part of their credit decision making process.
The good news is our step-by-step business credit building system is designed to move you through each phase of the credit building process so your company can qualify for vendor credit, retail based credit, business credit cards and other forms of financing.
5) Obtain a Company Fleet Card or Gas Card – A fleet card is a fuel card to help a business manage its expenses associated with all the company’s vehicles. It’s mainly used by businesses for tracking fuel, repair, and maintenance of two or more company vehicles.
A small business gas card is better used for a business with a single vehicle. Although both types of accounts have similar uses, the fleet card is a better option for a business with high gas usage since there are greater cost savings associated with fleet cards.
Both types of cards help build business credit since they report to business credit reporting agencies. By using a fleet or gas card for your company’s fuel expenses you establish ongoing credit and payment activity on your company’s credit file.
Keep in mind, in order to qualify for a fleet or gas card for the business it’s important that your business already have an existing credit report and scores established.
The majority of all large oil and gas companies, such as Shell, Chevron and ExxonMobil require 3-4 trade references on their business credit applications and will check your company’s business credit report as part of their credit decision making process. This also holds true for providers that specialize in fleet cards as well, such as Fleetcor, Fuelman, and others.
Well there you have it. Five ways to build your business credit as fast as possible. Remember, building up your business credit report is not about how many accounts you have reporting. Other factors such as payment activity, payment history, size of credit limits, types of credit and length of credit history all play a factor.
For additional strategies on how to start building business credit fast be sure to check out the ‘5 Best Business Credit Building Hacks for Maximum Results‘.
Until next time.
Ready to build your business credit fast? 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 ($497 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, Business.com, 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’.