Build And Establish Business Credit

Now that you know the difference between business and personal credit , let's focus on how to build business credit with bad personal credit to establish business credit. Dun & Bradstreet and Equifax also keep business credit reports on your business. 4. Open a checking account in the name of your business: Using your EIN and DUNS number, go to your bank and open a checking account. Start by doing business only with vendors and suppliers that are able to report your company's payment history to credit-reporting agencies such as Dun & Bradstreet , Experian , Small Business Financial Exchange and Cortera, Ms. Detweiler says.

(Dun & Bradstreet requires businesses to show at least three trade lines for their Paydex score). Therefore using only personal credit for business lending ends up in businesses that are under funded. Building good business credit can help you get lower-interest small-business loans, business credit cards and better terms from your suppliers.

The IRS uses an employer identification number (EIN) to monitor businesses—mostly for employer payroll tax purposes. Heads up, though: If you revolve a balance on your credit card, the interest rate may be higher than what you'd pay on your credit line. You may already have vendors that you pay on terms, but ask (rather than assume) that they report the payments.

There is nothing magic about 10 reporting trade lines other than the fact that many lenders and vendors have set that as the bar for no longer requiring a personal guarantee for lending your business the money or providing your business with the line of credit.

At some point, you'll want to establish a strong, sparkling business credit history. Ask any companies you do business with to report transactions to each business credit bureau to help build your business' credit score. The Small Business Administration also recommends you list your company's number in 411 directories so it's easier for lenders to complete their verification processes.

A Dun & Bradstreet account also helps you get a business credit line quickly. Good business credit may help you get financing at better terms and suitable deals from suppliers. While opening new credit cards isn't always advisable, you should consider opening a credit card in the name of the business and use it wisely.

Withdraw money to spend as you need it, but leave the rest in the savings account, where it will earn interest and can be used toward repaying the loan. Credit can be an essential part of business success, from procuring startup money to business credit cards to loans that might be necessary along the way.

That's why businesses with tax liens have a much tougher time getting credit than a company that may be hurting financially but still manages to pay a significant amount down each month on their credit card bills. To offset this, be sure to pay off any amounts owed as soon as possible (many of these negative marks will remain on your business credit report for 7-10 years!).

Dun & Bradstreet (D&B) is one of the main business credit bureaus and runs its own business credit score. If you're unable to repay your business credit card bill, the issuer can simply take from your deposit to recoup their losses. Since a creditor, lender or supplier can now easily determine your company's risk level with a business credit check qualifying will be a much easier process.

Fleet Cards - A secured fleet card is another form of credit you can acquire with bad personal credit and generally requires a very small security deposit of $300. Start with five vendors that report your payment experiences so your company can generate a report and business credit rating.

If you are like many small business owners who are still using personal credit to finance your business, you may want to rethink your financing strategy. For that reason, make sure your credit company will report to the bureaus before you sign the dotted line.

This shows the repayment history and behavior of each company and make a data-driven decision on whether to extend credit to that company or not. Once you get more established, you can move on to a business credit card. Businesses can obtain 10 to 100 times greater financing than an individual.