How to Build Business Credit Fast

Build Business CreditThere are a number of well-known lending guidelines that are important to comply with if you wish to quickly build business credit. Business credit and financing are in short supply, so building credit requires diligent effort in order to make your business competitive.

Worry not—simply following the basic steps outlined below will dramatically improve your chances of securing financing. Starting out the process the right way can make it far easier to address your business’s financial needs down the line. Even if your business has been in place for some time, the same guidelines apply.

Steps to Building Business Credit Fast

1)   Create a legal structure for your business. Corporations and Limited Liability Corporations (LLCs) tend to be the most common choices for businesses. Once you’ve officially registered your corporation with the federal government, as well as with the state in some areas, you will be able to start building business credit.

2)   Acquire a separate business address and phone number. Ideally, these should not overlap with your personal address and number. Having separate location and contact information helps make your business look legitimate to potential creditors.

3)   Get a federal tax ID number. Also known as an Employer Identification Number or EIN, this number is used for tax purposes in lieu of your Social Security Number.

4)     Sign up with credit reporting agencies. Dun & Bradstreet is one of the most widely used agencies as they contract with the U.S. government to provide an additional identification system for tracking business credit history. Getting a  D&B D-U-N-S® number is simple, easy and helpful in creating a business credit profile.

5)     Open business checking and savings accounts. Deposit money into your savings account if possible so that you can later use it to secure lines of credit, loans, and more.

6)   Obtain credit cards and lines of credit from commercial suppliers. Many suppliers, such as Lowes and Home Depot, offer easily secured credit cards that can be useful in building business credit. While credit limits may be low and not address all your financial needs, they will help you demonstrate your reliability.

7)   Use credit responsibly and pay your bills on time. Be careful not to overextend your business financially. Being able to make payments on time and in full is critical to building business credit.

 

Author:

After graduating with a B.A. from Occidental College, Ben Wills worked for several political non-profits on economic policy, government transparency, and public accountability issues.