How Establish and Build Your Business Credit
Establishing and building business credit is important for any company. Even if you’ve started a small business, there would be time when you’ll want to expand your market. By this time, acquiring business financing assistance may be necessary.
Applying for a business loan would be a lot easier if you have an outstanding business credit history to back you up. This is why every small business owner should strive to establish their business credit as early as possible. An excellent credit will surely add to your credibility as a business owner.
How do you establish business credit?
The first step to establishing business credit is to register your business entity. You’ll need to secure all business licenses and permits required by local government. You’ll also need to set up your office and register your business address in order to be recognized as a legitimate company.
The next step would be to register your business with a business credit tracker like Dun & Bradstreet. You may need to wait for up to 30 days to complete your application but as soon as you’re approved, you can start building your business credit.
Business Credit Cards for Building Credit
One way to build business credit easily is to apply for a business credit card. Make sure that the business credit card company you choose will report your payments to the business credit bureaus. Use your credit card to purchase necessary business equipment and stocks. However, see to it that you can pay off all your charges on time.
Stick within your credit limit. If you’re in a business that often calls for big purchases, you’ll want to find a business credit card with a higher credit line. This way, you can use your credit card without maximizing or exceeding your credit limit.
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Make it a goal to pay off all your credit card charges in full each billing cycle to avoid the interest rate fees as well as late penalty charges. Even if your business credit allows a low minimum due payment, it’s best to settle all your balances every month to avoid bad debt.
Monitor your credit card account regularly. Furthermore, check your business credit report at least twice a year. By being a responsible borrower not just to your business credit card issuer but to all your lenders, you can build an impressive business credit rating or Paydex score.
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Pamela Williams is a Loan Consultant, Internet Marketer and Writer. For years she had helped consumers and business owners especially regarding business credit cards. This resource is dedicated particularly on business credit card reviews, articles, tips and advice, and online application so that consumers and business owners may compare which is the best business credit card for their business. Copyright 2010 |
I’m an employee and planning to resign to have my own business. I will try to apply for a business credit since I don’t have a credit before.
@ Liam
It is recommended to have a credit for business because personal and business expenses are different. If you have a business credit, you will not have a difficulty in managing your bookkeeping and tax files.
Thanks for the post Liam.