how to build credit for my business
Building Credit | Credit

How to Build Credit for My Business

Building credit for a business can be difficult when you are just starting out, but it is an important step to take. In this blog post, I will show you how to build your credit and start generating revenue from the get-go. 

You don’t have to worry about being denied by suppliers or banks if they see that your company has been around for many years with good payment history!

How to build business credit

Below are the key steps to building your business credit.

1. Register your business entity

The first step to building business credit is registering your business entity. To do this, you’ll need to fill out a few forms and submit them to the appropriate government agency in your area (often called the DBA office).

Registration is free of charge for most people who register their company as an LLC or Incorporation.

Forming an LLC may be more suitable if you have many partners that will own shares in your company. Incorporation would work better with one person owning 100% of its assets/liabilities.

Once registering with the state has been accomplished, now you can start building credit! You can apply for a Dun & Bradstreet number which provides information about how well established companies are on a national scale–without having any payment history

2. Get an employer identification number (EIN)

You’ll then need to get an employer identification number (EIN) from the Internal Revenue Service. This is a nine-digit number that can be assigned to your business, and it will also help you establish credit with vendors or suppliers who want to deal with your company rather than an individual owner.

The IRS requires any business making more than $600 in gross receipts annually to provide their own EIN rather than using one of the individuals’ social security numbers.

This process may take up to four weeks before you receive your new EIN via mail which means plan ahead for this step when applying for loans as well since most lenders require proof of registration within 30 days prior to the approval date.

In order to apply online, go here: einonline.org then click the “Apply for an EIN” button on the left side.

In order to apply by mail, go here: irs.gov then click “E-File for Free,” and you will be redirected appropriately.

Once your application is complete with accurate information (name, address, etc.), it should take about four weeks before receiving a new EIN in the mail where it can be used as proof of registration or identification for loans.

3. Open a business banking account

You’ll also want to open a business banking account. This is the first step in being able to obtain credit for your company, and it’s important that you have an accurate date of registration so you can provide this information on any forms requested by the bank or if you’re applying for loans down the road.

Some things you should look for in a business checking account include:

  • Low fees for maintaining the account
  • Access to ATMs nationwide (especially if you plan on traveling with your company frequently)
  • Free online banking and bill pay

It’s also important to have a savings account for your business, where you can store excess funds and make deposits in advance.

4. Establish a business address and phone number

Even if you’re operating your business online, it’s smart to establish a business address and phone number, so you can have a verifiable place to send invoices or any other papers the bank may request.

You can establish this information easily in many states by filing the appropriate paperwork with your state’s secretary of state office. Some people register their business as an LLC or S-corporation — talk to a lawyer if you need advice on which route is best for your company.

5. Apply for a business duns number

A business DUNS number is a unique number assigned by Dun and Bradstreet, which is used to identify potential customers.

You can also apply for a DUNS number through the Bank of America website or you can visit your local branch. Once approved, it takes about three weeks to receive the approval letter via mail.

Getting this business identifier will allow other companies doing business with yours easier access to contacting you about payment options and how they plan on paying their invoices.

Once you have established an address that matches what’s listed in public records at your secretary of state office and set up a phone line (or VoIP service) that forwards all calls from landlines and cell phones, the time has come to get yourself some credit!

6. Open trade lines with your suppliers

Below, I’ll talk about opening a business credit card, but you can open other types of tradelines – namely with your suppliers – well before that. A supplier tradeline is a line of credit with a supplier, and this is the type of tradeline that will be easiest to get.

A business can open trade lines by requesting them in writing from their suppliers. Typically, it’s best to ask for an account receivable limit on invoices they have already received (assuming you plan on paying your bills).

The more credit you request upfront, the easier it’ll be for your new tradelines to report positive information each month. 

If you’re asking for $50k at once instead of just $25k or $30k, then if all goes well – which might not always happen! – then those first few months should see stronger progress than what someone who only asked for less would see during the same timeframe.

7. Get a business credit card or business line of credit

The next step to building your business credit is to get a business credit card. This will be one of the most important things you can do to build your credit. It will show the banks that you are serious and have a need for loans or other financing in the future.

To get a business credit card, all you need is an employer identification number (EIN). This can be obtained from the IRS website with some basic information about your company like how old it is, your address, contact info, etc., which they’ll ask of you when applying online through their secure site.

What to look for in a business credit card

The next step in how to build business credit is finding a good card. There are many choices, so it’s important you do your research and find the card that best suits your needs while offering low rates, no annual fees, rewards programs, etc.

After choosing a card from one of our favorite providers below (Chase or American Express) you’ll need to establish an account by filling out some basic information about your company like contact info and address on their secure site which will be handy for when they ask for additional information down the road as well.

A few other things to keep in mind include: what type of merchant services does this provider offer? Do they have any restrictions against certain types of businesses? What sort of customer are you planning on attracting?

All of these things can help you to make a more informed decision.

Keep your balance low and pay it off every month

Once you have a business credit card, you’ll need to ensure that you don’t put too much of your business’ funds on it.

The best practice is to keep the balance low and pay off the card every month – this will help with establishing a good credit history, which in turn makes for more favorable terms down the road.

It’s very important to make sure that you only use the card for your business – if it’s not, then this will be reflected in how they’ll view your application.

In addition to that, make sure that you’re using a reputable company that has good customer service and offers some type of protection plan against fraud.

Remember: if something happens with the provider (or their credit cards), you want someone reliable on your side helping out!

Pay all of your bills on time – even if you have to set up automatic payments

I can’t stress enough how important it is to make sure that you’re paying your bills on time. This means making sure not just the credit card, but all of your other monthly payments are paid off in full and on time.

The people who will be reviewing this application will want to see how reliable you are with handling deadlines – so don’t let them down!

Keep a good history for yourself by only using reputable companies who offer protection plans against fraud; this way if anything happens (or their cards), they’ll help fight any charges or take care of things without you having to do too much work.

In addition, always know what kind of terms apply before applying: some may require an annual fee while others might charge higher interest rates than you’re comfortably paying now.

One easy way to ensure all your bills are paid on time every month is to set up automatic payments to go out on the same day every month.

If you’re in an industry that doesn’t usually take credit cards, don’t forget about how important it is to build your business’ credibility with potential customers – for them to see how reliable and trustworthy your company is.

Use the card for everyday expenses, like office supplies or gas

A great way to leverage a business card for growing your business credit is to. to use the card for everyday expenses, like office supplies or gas. Most businesses need office supplies, for instance, and this is a routine expense.

Some daily expenses are even more important to have the company’s credit card on hand for – emergencies, like an unexpected car breakdown or illness that could lead to missed workdays (or worse).

Don’t use more than 30% of the total limit on any one card at a time

Don’t use more than 30% of the total limit on any one card at a time. Finally, it’s important to keep in mind when applying for credit that you should never use more than 30% of the total limit on any one card at a time.

Requesting a copy of your personal report and comparing them side by side with the business’ will give you an idea as to how they compare. That way, you can see what areas need improvement or might be causing discrepancies between the two reports.

Some organizations may have different requirements than others – so make sure that you’re getting a copy of all your business credit reports so you can compare and contrast.

8. Check your credit score regularly to make sure everything is going smoothly

Another important thing to do is to check your credit score regularly to make sure everything is going smoothly. Checking your rating monthly (or quarterly) can help you spot irregularities, and get ahead of any problems before they happen.

It’s important for business owners to understand the risks involved with running a company – maintaining good personal credit helps protect their assets from unforeseen circumstances like injury or illness impacting how much money they have coming in each month.

The tools and resources available that are designed specifically for businesses will be invaluable when it comes time to apply for loans, open new lines of credit, purchase inventory, or take out a lease on the property.

Checking your business credit

Now, it’s important to understand that checking your business credit is different than checking your personal credit. To get a copy of your business credit report, you’ll need to contact the business credit reporting agencies and request a copy.

The most common business credit reporting agencies are Dun & Bradstreet, Experian Business Solutions, and Equifax. These agencies will be able to provide you with a copy of your business credit report that includes everything from how much revenue the company brings in annually to how well they’ve been managing its debt.

Some things to keep in mind when it comes time for the credit check:

  • Requesting a copy of your personal report and comparing them side by side with the business’ will give you an idea as to how they compare. That way, you can see what areas need improvement or might be causing discrepancies between the two reports.
  • Some organizations may have different requirements than others – so make sure that if there are any specific criteria set forth for getting approved for credit from said organization, you adhere to those guidelines precisely. Otherwise, this could lead to delays in processing or even outright rejection altogether.

FAQs

How can I build my business credit fast?

The first thing that you can do to build your business credit fast is by making sure that the company has a good payment history. This will help establish credibility, which in turn helps with financial stability. It also pays off to have an idea of how much money the company makes on average per year – and how long it’s been operating.

Can I use my ein to apply for credit?

Your EIN is not designed to be a substitute for your SSN – they are different identifiers. You can use your business’s EIN on applications that require it, but you need an SSN in order to apply for anything like loans or other financial assistance.

Does an LLC have its own credit score?

An LLC does not have its own credit score, but it can be an indicator of how the business has been operating financially.

Summary

Building credit for a business can be difficult when you are just starting out, but it is an important step to take. In this blog post, I will show you how to build your credit and start generating revenue from the get-go.

You don’t have to worry about being denied by suppliers or banks if they see that your company has been around for many years with good payment history! Build your reputation today so that tomorrow’s success becomes a reality!