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5 Strategies to Build Business Credit Easily and Quickly

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Build Business Credit

In today’s post we share five key strategies for building business credit easily and quickly. These five strategies provide a fast and efficient way to establish your business credit file with major business credit reporting agencies.

If your new to building business credit it’s important to recap on why it’s an essential step in the success of your business. So, what is business credit?

Business credit is the ability for a business to borrow money or access products or services with the understanding that the business will re-pay at a later date.

Building business credit allows a business owner to protect personal credit while establishing the creditworthiness of the business itself. building business credit

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.

Your company’s Employer Identification Number (EIN) is used to identify your business entity to the IRS, banks, lenders, suppliers, vendors and other businesses.

Your EIN is also used to create a credit file for the business with business credit reporting agencies such as Dun & Bradstreet, Experian Commercial, Equifax Business, Creditsafe and Ansonia.

Think of your company’s EIN as the social security number for the business.

Here are 5 strategies to start building business credit easily and quickly.
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How to Build Business Credit When Paying Your Business Expenses

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How to Build Business Credit

In today’s post we’re going to talk about a key fundamental step for building business credit for your company.

While acquiring credit from vendors, suppliers and other businesses that report to the business credit agencies is a widely known practice for establishing business credit; why not also have your business expenses build business credit too? How to Build Business Credit

The fact is, if you have a business, you will have business expenses. These are costs you have in the ordinary course of running your business day-to-day. For example, putting gas in your car to go to a business appointment, taking a client out to lunch, paying utility bills, paying for postage to ship a product, etc.

When you pay for these expenses, it’s crucial to keep your personal finances separate from your business finances. You don’t want to commingle these expenses because it will cause a real challenge during tax time.

In addition, you should establish a budget, keep good records and implement an effective business credit building strategy.
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How to Build Business Credit in 30 Days

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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. how to build business credit in 30 days

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.
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How to Build Business Credit Step by Step

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How to Build Business Credit Step by Step

Have you heard the expression “Success leaves clues” from the famous Tony Robbins? how to build business credit step by step

If you look at the most successful businesses in America they all have one thing in common; they all have business credit. Many of these big companies continue to use business credit today to grow and expand their companies.

For example, mega retail giant Walmart has over 500 trade lines reporting on its Experian business report. This is how they stock their stores and maintain close to $30 billion in accounts payable to their suppliers.

The most important thing to realize is the benefits of business credit is not only available for big business. Startups and small businesses can also enjoy the same benefits and leverage that a big business has once they know the process and put it into action.
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Top 10 Business Credit Building Mistakes

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Building Business Credit Mistakes

Business Credit Building

 

While many small business owners realize the benefits of starting business credit there are many mistakes that are made in the business credit building process. I felt that compiling a list of the most common mistakes I’ve seen throughout the industry can serve as a helpful guide to you. Here they are…

Choosing the wrong entity structure

Selecting the right entity structure for your business is the most important step you can make. Not just from a business credit standpoint but also from a tax and asset protection standpoint as well.  In addition there are state filing fees, franchise fees, licenses, resident agent service and a host of other important factors to consider.

Selecting the wrong SIC code 

There are certain codes that the business credit bureaus and lenders tend to stay away from. These industries include real estate investing, car sales, adult entertainment, travel, lending, restaurants, and dry cleaners. When you classify your business be sure to stay away from these classifications.

Selecting the wrong NAICS code

If you plan on investing in real estate then you will want to make sure that the company you build credit on is not “real estate investing”. Most banks will automatically turn you down because this is a high risk category. You still will be able to invest in real estate but you may have to set up a business that does business development, business consulting, marketing & advertising, training and development, etc. and then operate your real estate investments from a separate division or company that does something else.

Using a home or cell phone number as a business phone number

There’s nothing wrong with using these phone numbers but when it comes to business credit building it does matter. Your number has to be listed in the 411 national directories and cell phones and VOIP as well as call forwarding numbers do not work.

Having inconsistent information on business documents

When you start business credit you must pay close attention to details. The information used to open your credit file must match the information you use on applications, documents, and filings.

Applying for credit with the wrong vendors

There are 500,000 vendors in the U.S. that extend credit to businesses but less than 6,000 report to the business credit bureaus. Too many make the mistake of believing that simply doing business with a vendor will result in establishing business credit. Not true!

Applying for credit with vendors that report slow

There are vendors who do report your payment history but only on a quarterly or even yearly basis. Time is of the essence so you have to make sure the vendor you apply with also reports to the business credit bureaus on a monthly basis!

Applying for personal credit cards disguised as business credit cards

Pay special attention to what a credit card application requires and what the terms and conditions are.  A credit card that reports only to your personal credit is not a true business credit card

Applying for business credit cards that do not report to the business credit bureaus

There are over 500 business credit cards available in the marketplace but less than 70 report your payment history to the business credit bureaus.

Not establishing an effective bank rating

A minimum of a low 5 bank rating is a must if you plan to apply for a line of credit or loan. You can achieve a low 5 rating with a $10k balance in your account.

To access a complete step by step business credit building system with insider secrets, premium vendors, leasing companies, business credit cards, and lenders that report to all the major business credit bureaus become a member of my Business Credit Insider’s Circle. Submit your name and email below for details and receive a free audio seminar ($597 value) =>

To Your Success!

 Marco Carbajo

About the Author

Marco Carbajo is a business credit specialist, author, speaker, and founder of the Business Credit Insider’s Circle. He is a weekly columnist for Dun & Bradstreet Small Business Solutions, a corporate credit blogger for All Business & American Express Small Business 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 Business Week, The Washington Post, The San Francisco Tribune, Scotsman Guide, Alltop, Entrepreneur Connect, and Active Rain.  

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