Starting to Build Business Credit

A business starts building a brand new credit profile much the same as a consumer does.

The business starts with no credit profile. The business gets approved for new credit that reports to the business credit reporting agencies.

The business uses the credit and pays the bill timely. A positive business credit profile is established. As the continues using the credit and pays bills timely it will qualify for more credit.

When building an initial profile it’s ESSENTIAL that you meet credit issuer’s criteria. Remember, your personal credit isn’t being used for approval.

And you have NO yet established. This means what’s on your APPLICATION is ALL that’ll be looked at for approval, so your application must be very strong to assure approval.

If you truly want to separate business credit from personal credit your business must be a separate legal entity not a sole proprietor or partnership unless you have a separate business entity (Corporation or LLC) you might be “doing business” but you are not truly “a business”. These entities by default eliminate your personal liability, other entities don’t.

One of the biggest reasons for denial is your application not having the same legal name as what’s filed in state records. It is very important that you use your exact business legal name.

Your full business name should include any recorded DBA filing you will be using. Insure your business name is exactly the same on your corporation papers, licenses, and bank statements.

Whether you have employees or not, your business entity must have a Federal Tax ID number (EIN), just like you have a Social Security Number your business has an EIN.

Another bonus of is that most business credit can be obtained without the owner taking on personal liability, or a personal guarantee. This means in case of default, the business owner’s personal assets can’t be pursued.

It’s important to keep in mind that anyone can see your business credit reports, so having business credit makes your more credible for prospects, clients, competitors, lenders, credit issuers and those interested in buying your company.

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