Building business credit is an important step for any small business owner. Having a good credit score can help you obtain financing, secure better rates on loans, and establish credibility with vendors. Fortunately, there are several steps that entrepreneurs can take to build their business’s credits:
1. Establish Your Business Entity: The first step in building your company’s credit is to establish the legal entity of your business (LLC or corporation). This will allow you to open a bank account and apply for tax identification numbers such as an Employer Identification Number (EIN) from the IRS or DUNS number from Dun & Bradstreet. These numbers will be used when applying for lines of credit with lenders and creditors so it’s important that they are accurate and up-to-date at all times!
2. Open Bank Accounts: After establishing the legal entity of your company, it’s time to open separate bank accounts in its name – one checking account where funds come into play; another savings account that should serve as a reserve fund; plus additional accounts if necessary depending on how many transactions occur within each month/yearly cycle, etc. Make sure these accounts remain active by regularly depositing money into them – this shows lenders that you’re serious about managing finances responsibly! Additionally, make sure not to overdraft any given financial institution more than once every six months otherwise this could hurt your overall rating negatively over time too…
3 . Apply For Credit Card: Applying for multiple corporate cards under the same EIN allows businesses access higher limits than personal cards while also helping build their scores quickly since payments made using them appear on both personal reports AND commercial ones simultaneously – meaning they have double impact power! Be aware though some issuers may require physical collateral before approving applications so make sure everything is ready beforehand just in case…
4 . Pay On Time And In Full: One key factor affecting companies’ ratings positively revolves around paying bills promptly without fail no matter what type those invoices might represent, ie vendor supplies services rendered etcetera. It doesn’t matter whether payment comes via check, direct debit, or automated withdrawal card, whatever method is chosen, always ensure due dates are met, the full amount is paid down even if late fees are applied afterward, still cover the total cost owed Otherwise missed payments show potential creditors negative pattern behavior which ultimately hurts chances obtaining new funding sources going forward
5 . Monitor Progress Regularly: Lastly don’t forget to monitor progress regularly use tools like Experian Business Credit Score to track changes
