How to Build Business Credit in 30 Days
Today, we’re talking about how to build business credit in 30 days. In this post, you’re going to learn step-by-step how to establish anywhere from 12 to 15 accounts reporting on your company’s business credit reports whether you’re a start-up or an existing business in 30 days or less.
So, let’s get started.
Why build business credit? Building business credit allows a business owner to protect their personal credit while establishing the creditworthiness of the business itself. With a separate legal entity such as a corporation or limited liability company, you have the unique ability to create a credit identity for the business also known as a business credit profile with the business credit reporting agencies.
When you structure your business as a corporation or limited liability company it becomes recognized as a separate legal entity with the ability to enter into contracts. It’s treated as a separate being. Basically, you have the ability to create a credit file in your company’s name using your EIN number.
As you know you have a Social Security Number. Your social security number is used when you apply for personal credit while a business has an EIN number which is also known as your Employer Identification Number.
Your EIN is used by the IRS for tax purposes, but this also gives you the ability to create a business credit report with the business credit reporting agencies. This credit profile for your business is vital if you plan on acquiring credit or funding using your company’s credit report as a qualifier.
Banks, lenders, vendors, suppliers, retailers, business owners & investors check business credit reports to gauge the creditworthiness, the viability and strength of a business.
If you’re a start-up or existing business with no business credit report established, then your personal credit will be the major factor that lenders use during their underwriting review. They use you, the personal owner, that’s why they require personal credit checks and personal guarantees.
What are the Benefits of Building Business Credit?
One of the major benefits of building business credit is it allows you to protect your personal credit and truly create that separation between you and your business.
As you build up your business credit file, less emphasis will be placed on your personal credit during a review. As you continue to establish a diverse and well-established business credit report your company will be in a position to qualify for even more credit and more funding in the future.
With business credit you also limit your liability and conserve cash flow because when you’re getting additional credit for your company you can use it to get different types of financing and repayment terms.
For example, with revolving credit you can service debt much easier because you have minimum monthly payments or you can get net 30 accounts which allows you to conserve cash flow because you can buy products and services on credit and then pay for those products and services in 30 days.
You’re also going to get better rates, terms and credit approvals when you have a strong business credit report. It’s important to realize not only do you have the types of credit reporting but you also have the size of the credit limits extended to your business reporting as well.
So, it’s important to not only establish a diversity of credit accounts but to have sizable credit limits reporting as well. With larger credit limits, it shows lenders and suppliers and investors that your business is capable of handling higher amounts of credit.
For example, let’s say you want to apply for a new personal credit card and the highest credit limit you have on an existing credit card is $500.
Well, a bank is not going to issue a $25k personal credit card if the highest limit you have on an existing card is $500. You may get approved for a $1k or $1,500 card limit but that’s likely the results you should expect.
This is why the size of your company’s existing credit limits reporting on its file is so important. Also, when you have a good credit file it becomes an asset for the business. You can have access to working capital and credit when you need it to grow and expand and even scale your business.
What Do You Need to Establish Business Credit for the First Time?
When we’re talking about building business credit in 30 days or less, many times you’ll realize there’s many different products and services out there where it does take a long time to build that history. But I’m going to share with you the fastest and most powerful way to build a creditworthy business credit file in 30 days or less.
So, what do you need to start building business credit in 30 days?
1) Separate legal entity (Corporation, LLC, etc.) – If you want to accomplish this in 30 days, first you will need a separate legal entity whether it’s a corporation or limited liability company.
2) Company must be in good standing – Prior to applying for any type of business credit you have to make sure your company is in good standing with the state.
Depending on what state you’re incorporated in, there is an annual report filing you may have to pay. You can check your state’s website and look up your company and make sure it’s in good standing. If it’s not in good standing the first thing you want to do is make sure you pay your annual report filing fees up to date.
If you haven’t paid the annual fees for several years you’ll need to get caught up because what happens is when you apply for credit, banks will check that your company is in good standing. If it’s not in good standing or it’s inactive then you’re going to get declined right away, so that’s very important.
3) Employer Identification number – You need to apply for an EIN number if your company does not already have one.
4) Business contact information – You will need to supply your business contact information so be sure to have it on hand. Your business contact information is going to be the name of your business, business mailing address, physical business address, business phone number, business email address and main contact person.
All of this information you supply on credit applications is very important because this is the data used to create your business credit file. That data is then reported and shared to a business credit agency.
A business credit reporting agency, such as Experian Commercial, compiles that information, verifies it, uploads it and creates the credit identity for your business. So, before you go out and start building business credit in 30 days make sure you have all your ducks in a row. Make sure you’ve met all the standard requirements to have a legitimate operating business.
5) Business checking account – You want to have a business checking account along with your banking details. You will need your articles of incorporation, certificate of good standing and EIN to open a business checking account.
How Do I Build Business Credit in 30 Days?
Once you have these standard items in place now you’re ready to get 12 to 15 accounts reporting on your business credit reports in 30 days or less.
After putting the following strategies in place you’ll also have a business credit rating established.
More importantly we’re to going to show you how to not only add new accounts to your file but also up to 24 month’s payment history as well. And this is going to allow you to maximize your credit limit recommendations in the future.
What is a credit limit recommendation? Dun & Bradstreet, a major business credit reporting agency, has a credit limit recommendation displayed on a company’ credit report. So, when a supplier is checking your business credit report, they look at the credit limit recommendation as a gauge for how much credit should be extended to that business.
They have a conservative and aggressive limit. When you have 12 to 15 accounts reporting and you have very sizable credit limits, that increases your credit limit recommendation. This is why we want to share this information with you. We want you to maximize your credit potential as a business in the shortest period of time possible: 30 days.
#1 Get Business Credit Building Cards
First, let’s talk about strategy number one; get business credit building credit cards. If you’re a start-up and you have good personal credit you can take advantage of this strategy by leveraging what you already have; good personal credit.
If you own an existing business and let’s say you have one or two business credit cards but they only report to your personal credit reports then you need to implement this strategy a.s.a.p. You can protect your personal credit and create that true separation from your business with business credit cards that report only to the business credit agencies.
The timeline for this strategy is 14 to 20 days. We can obtain four to five revolving lines of business credit (business credit cards) and your combined credit limits are going to range anywhere from $25k to $150k.
Most clients get anywhere between $60 to $100k so that’s kind of the typical combined credit limit range. Now to qualify and get these types of cards you need at least a 680 FICO® score on all three bureaus.
If you have a higher credit score that’s great but it’s not the only factor that is looked at. The age of your accounts, payment history, and credit utilization on your personal credit cards need to be under 50%. That’s very important.
The other thing we look at is the size of your existing credit card limits that you currently have where you’re the primary account holder. This is simply a gauge to give you an idea of what you may get for a funding projection.
What is the highest credit limit you currently have on a personal credit card? Let’s say your highest credit limit is $10k.
So, on the business side with our projections you may be able to get four to five times that amount in combined credit limits for the business. With your highest existing credit card being $10k you may get a $40-$50k projection for business credit card funding.
Now these particular cards only report to the business credit reporting agencies such as Experian. This benefit is what makes about our program so unique because most cards may be labelled as business credit cards, but they report to your personal credit.
So, every time you’re incurring debt on those cards for the business your personal credit takes a hit, your business debts show up on your personal credit. So, this doesn’t benefit you; our cards do.
These business credit cards also help you establish four to five banking relationships for the business. The reason you want multiple cards is to establish a diversity of banking relationships.
With diversity you have banks competing for your business which ultimately benefits you. Banks offer business cardholders with 0% balance transfer checks, additional funding products, credit limit increases, etc.
This program alone builds four to five revolving credit accounts reporting to your business credit reports not personal credit. Remember when I talked about how establishing a diversity of credit for the business is so important. This accomplishes just that.
On the personal side, you know it’s ideal to have various account types such as a mortgage, auto loan and some credit cards. That credit diversity is important, and the same thing applies for your business.
Don’t fall for the mistake thinking net 30 accounts are all you need to build business credit. Net 30 accounts only show that your business can handle short-term financing. When you get revolving lines of credit, installment credit, and service credit; these are diversified credit accounts reporting which shows your business can handle various types of financing.
Business Credit Cards Overview
- Timeline 14-20 days
- Get 4-5 revolving lines reporting to your business credit reports ($25-150k)
- Minimum of 680 FICO® Scores
- Get 4-5 business credit cards that only report to the business credit agencies
- Establishes 4-5 banking relationships for the business
- Builds 4-5 positive accounts reporting to your business credit file (revolving lines)
- Gain access to $25-$150k in revolving lines of business credit
- Does not report to personal credit
- Positions the business for future credit limit increases
How Does Business Credit Card Pre-Qualification Work?
The pre-qualification process is fast and doesn’t cost you anything to find out how much we can get for you in business credit card limits. The first thing you need to do is order a tri-merged credit report.
A tri merged report is all three credit reports blended into one report with all three credit scores. This will allow our underwriters to do a full assessment and give you an accurate funding projection.
Keep in mind ordering your own report does not trigger a hard inquiry. To order your tri-merged report we recommend http://knowmycredit.org
If you already have an account with a different provider where you can obtain a credit report that’s fine. It just has to be a tri-merge report in PDF format.
If you only submit a single report, we can give you a projection but it’s not going to be 100% accurate because all three credit bureaus and scores are different. We can leverage your highest score and your highest report to get you the best approvals, but we want to see the full profile.
How to Start the Pre-Qualification Process
Step 1: Order Your Tri-Merged Credit Report => http://knowmycredit.org
Step 2: Download Your Report in PDF format via your Score IQ Dashboard
Step 3: Complete the Pre Qualification Form and Upload Your Tri-Merged Report
*Pre Qualification review takes 24/48 hours. You will be contacted via phone with funding projections and next steps. Funding process takes 14-20 days.
Once you sign up log into your Score IQ account and select the ‘View Report’ tab. Next, there’s a download tab at the top of the page be sure to use drop down and select PDF. Next, click ‘Download’ and save the file onto your computer.
Fill out your information, upload your tri-merge report and click on the Submit tab.
You’ll get an email confirmation from us shortly. The review will take about 24 or 48 hours and we’ll give you a call back and go over the results along with funding projections.
What to Expect after Pre-Qualification Review
Once the pre-qualification review is complete there are one of three things that are going to happen.
1) You get a business credit card funding projection.
2) You get a business credit card funding projection with conditions. (paydowns or other requirements must be met first)
3) You get a denial.
If you get a denial there are many factors that may play a role. We’ve seen plenty of people who have good strong credit scores 730/740 get rejected. Why does this happen?
Because it could be the majority of their strong accounts could be from authorized user counts. They may have too few primary counts coupled with a thin credit history.
If that’s the case we may provide you with a funding projection on the personal side so you can build up your personal credit.
So, let’s say your personal credit is not strong enough for business credit card funding, but we can help you build up your personal file. We accomplish this by getting you set up with personal lines of credit, a personal loan and a few personal credit cards.
This will help you get some cash now to inject in your business so you can grow while building up your personal credit so in six to twelve months you can get business credit card funding.
#2 Report Your Company’s Utility & Telecom Payments
With this powerful strategy you can add all of your company’s utility and telecom payments (up to eight accounts) to your business credit reports in less than 30 days. These are operational expenses you’re already paying for but just not benefiting from them reporting on your business credit reports.
As a start-up or existing business, you have operational expenses such as electricity, water, gas, mobile phones, cable TV, satellite TV, internet service, landline phone, etc. These are all utility services that you pay to run your business.
The good news is now you can add all those ongoing utility payments to your business credit reports. Once you link your accounts online, we securely download up to 24 months of payment history directly from your providers website.
Let me walk you through how powerful this is. Let’s say you’ve been in business for two years and you’ve been paying for your company’s cable service, mobile phone, internet service and landline phone each and every month like clockwork.
That’s two years of positive payment history that no lender, supplier or credit grantor gets to see because it doesn’t reflect on your business credit report.
By implementing this strategy, you can add all two years of payment history on your business credit report in less than 30 days. Also, all future payments will continue to report to your business credit reports so every month you’re paying utilities your also building business credit too!
So, if you want to add your business utility payments to your business credit report go to BusinessCreditBuilderservices.com to get started adding your accounts.
Report Utility & Telecom Payments Overview
- Timeline 15-30 days
- Add up to 8 service accounts reporting to your business credit reports
- Can add business operational expenses such as power, water, gas, mobile phone, cable TV, satellite TV, internet, and landline phone to your Business Credit Account.
- Once you link your accounts, we securely download up to 24 months of payment history directly from your provider’s website.
- Then on a monthly basis, we automatically report your payments to the business credit reporting agencies. This is an automatic way to build your business credit reports and scores.
#3 Use Starter Vendors
I’m sure you’ve seen all over the internet about using starter vendors such as Quill, Uline, and Grainger for building business credit. Some of them require you to to make an initial purchase and then you have some of vendors that only report quarterly while others don’t report at all.
Vendor credit is a great way for your business to get access to quick credit with short term financing also known as a net 30 account. Net 30 credit allow you to buy products and services for your business and defer the payments for 30 days.
This allows your company to conserve its cash while establishing your business credit file. But you want to make sure you strategize and use the right starter vendors because not all vendors report to the business credit agencies.
Now you don’t have to get a large amount of starter vendors, it makes no sense unless you can actually use the products and services for your business. Once you acquire a couple of starter vendors (3) and generate a business credit rating than you can work to acquire larger credit lines from more popular vendors and retailers.
Now some of you may say, “Well if I get all these business credit cards, why do I need starter vendors, why do I need vendor credit?” Because it shows that your business can handle short-term financing.
Remember, it’s crucial that you established a diversified business credit file. Not only do you want to acquire a couple of vendor accounts but you also want retail accounts, gas cards, etc. Think of credit diversity for your business as the same concept when it comes to building the diversity in your personal credit.
One example of a starter vendor that I recommend is a company called Shirtsy . They do require a $99 membership fee and then they extend your business a $2,00-$4,000 trade-line reporting with a $400 monthly credit spend. (net 30-day terms)
To get started go to http://net30account.com
They report monthly to multiple business credit reporting agencies: Dun & Bradstreet, Experian Commercial, Equifax Business, SBFE, Payne, Ansonia and Credit Safe. This will create a credit file for your business with each of these agencies if your company doesn’t have an existing file.
This is just an example of one starter vendor but if you want to get access to more vendors, suppliers, retailers and credit grantors check out our business credit building system for our complete and extensive researched database.
For more net 30 vendors be sure to check out our post Top 5 Net 30 Vendors for Building Business Credit.
#4 Get a Secured Business Credit Card
If you are unable to go the unsecured route then this is a viable alternative to get a revolving line of credit reporting on your business credit report
With a secured business credit card your credit limit is based on the amount of your security deposit. This allows you to start a relationship with a bank while building your business credit.
So, one example is the Tillfull secured business credit card. The minimum security deposit is $500 which will equal the credit limit issued to your business.
Another example is the First National Bank business edition Visa® card. This bank requires a $2k security deposit and goes up to a $100k. Now why would a company deposit such a large sum of money for a secured card?
Not only would the high credit limit report on the company’s business credit report but the money deposited earns interest. Another plus for this card is they give you 110% of your deposit towards your credit limit.
The 10% of unsecured credit that is initially extended is a unique benefit offered by First National’s secured card. For example, if you deposit $5k for a business edition secured credit card they’re going to extend to you a $5,500 business credit card limit. (110% of the deposit)
Secured Business Credit Card Overview
- Timeline 30 days
- Get a revolving line of credit (secured) reporting to your business credit report
- Credit limit based on security deposit
- For business owners with little or fair credit history
- Does not report to personal credit
- Tillfull secured business credit card
- First National Bank Business Edition Secured Visa ($2k – $100k) -earn interest on security deposit, amount of security deposit is 110% of your credit limit
#5 Accept Credit Cards for Payment (Merchant Processor that Reports)
Okay, now let’s get into strategy number five on how to build business credit in 30 days. Do you currently accept or plan to accept credit cards for payment from customers? As you know it’s pretty much standard practice for a business to accept credit cards since it’s the most widely used form of payment.
The first step is to get set up with a merchant provider. Now remember, your merchant provider becomes a trade reference you can use on future credit applications. The key is to use a merchant provider that reports your processing fees to the business credit agencies.
When you accept credit cards as a form of payment you pay processing fees to the merchant provider. There are different types of fees you get charged for depending on the type of transaction you process. Processing fees are something your business is already paying for if it accepts credit cards for payment.
Unfortunately, those fees don’t get reported to your business credit report. One particular provider that we recommend does report to the business credit reporting agencies. For details, be sure to check out BestMerchantCardServices.com.
If you accept credit cards via mobile, wireless terminals, or online you can benefit from this strategy fast. Simply start using our preferred merchant provider that reports so you can get credit for all the service fees you’re already paying.
Merchant Processor that Reports to Business Credit Overview
- Timeline 30 days
- Get a trade reference account reporting to business credit reports (ongoing)
- Use a merchant provider that reports processing fees
- Accept credit card payments (Mobile, wireless terminals, e-commerce)
- VISA, MasterCard, Discover, American Express, JCB & Fleet Cards
- Monthly merchant processing fees get reported as a trade line to the business credit reporting agencies
We just went over how to add 4-5 business credit cards to your business credit report with our funding program. Next, we showed you how to add up to 8 utilities to your business report.
We also talked about using starter vendors, since net 30 accounts are an important factor for building diversity on your business credit file.
If you’re struggling with credit issues, we went over how you can use secured business credit cards to add revolving lines to your reports.
Finally, you learned how using a merchant processor that reports your monthly merchant processing fees can be a fast and effective way to build business credit.
Do you see how each of these strategies can build your business credit in the fastest way possible?
Now what I’m not telling you to do is to go out there and spend money just for the sake of building business credit. These strategies are about what you’re doing right now or you’re going to do as a start-up or existing business that you should be benefiting from already.
Business Credit Building Results in 30 Days
- Business Credit Card $10k Limit Reporting (revolving)
- Business Credit Card $15k Limit Reporting (revolving)
- Business Credit Card $20k Limit Reporting (revolving)
- Business Credit Card $25k Limit Reporting (revolving)
- 2 Vendor Account $500 & $1k Limit Reporting (Net 30s)
- 5 Business Accounts Reporting Monthly (power, cell phone, cable, internet service, and landline phone)
- 1 Trade Account Reporting Monthly from your Merchant Processor
Results: 12 Tradelines with $71.5k in Credit Limits Reporting
Let’s go over the results you can expect in 30 days by applying these strategies. With regards to our business credit card funding program our average client gets anywhere from $60 – $90k but in this example let’s say we got you 4 cards totaling $70k in credit limits.
This of course is just an example but that’s typically the combined credit limit totals we get for our clients. As a result, you now have four revolving accounts reporting to your business credit report.
Next, let’s say you get two vendor accounts as well. You get a Strategic Network Solutions Vendor account for $1k credit limit and you get a Uline account with a $500 credit limit. So now you have two net 30 accounts reporting on your business credit reports.
Although you can add up to eight utility accounts, let’s say you linked five of them such as your power, cell phone, cable, internet service and landline. This equals five more business accounts reporting on your business credit report.
Finally, you get your monthly processing fees reported from our preferred merchant processor.
In this example, you have a total of 12 trade lines reporting with over $71k in credit limits on your business credit reports in just 30 days. So just imagine being able to accomplish this and what I’ve just shared with you is not something that’s an impossible thing to do.
These are proven strategies that we shared with you and how to get it done. But, let’s take it a step further by going over what happens in 60, 90, 120 days from now after doing this.
Imagine after the first 30 days you have a business credit profile with $71k in credit limits reporting. You also benefit from monthly reporting because your service accounts, merchants account, and business credit cards will be reporting.
What’s powerful is when you go to apply for additional credit you now have an established business credit report with sizable credit limits that credit grantors can see. This will play an important role in the types of credit you can acquire and the size of credit limits extended to your business.
This by far is the best way for you to position your business to get maximum funding approvals after 30 days and going forward.
Looking to rebuild your business credit? 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’.