Business Credit is credit that is obtained in a Name. With credit, the business builds its own credit profile and credit score. With an established credit profile and score, the business will then qualify for credit. This credit is in the name and based on the business’s ability to pay. Since the business qualifies for the credit, in some cases there is no personal credit check required from the business owner.
A starts building a brand new credit profile much the same as a consumer does. The starts with no credit profile. The business gets approved for new credit that reports to the business credit reporting agencies. The uses the credit and pays the bill timely. A positive business credit profile is established. As the business continues using the credit and pays bills timely it will qualify for more credit.
A cell or home phone number as your main business line could get you “flagged” as an un-established business that is too high of a risk. DON’T give a personal cell phone or residential phone as the business phone number. You can forward a virtual number to any cell or landline phone number.
Credit providers will research your company on the internet. It is best if they learned everything directly from your company website. Not having a company website will severely hurt their chances of obtaining business credit. There are many places online that offer affordable business websites so you can have an internet presence that displays an overview of your company’s services and contact information.
It is important to get a company email address for your business. It’s not only professional, but greatly helps your chances of getting the thumbs up from a credit provider. Setting up a business email address is just too easy and inexpensive to neglect.
One of the most common mistakes when building credit for your company is non-matching business addresses on your business licenses. Even worse is not having the “required” licenses for your type of business to operate legally. You will need to contact the State, County, and City Government offices to see if there are any required licenses and permits to operate your type of business.
A business credit report can be started much the same as a consumer report commonly is, with small credit cards. The business can be approved for small credit cards to help them build an initial credit profile. These types of initial cards in the business world are commonly referred to as “vendor credit”.
A vendor line of credit is when a company (vendor) extends a line of credit to your business on “Net 15, 30, 60 or 90” day terms. This means that you can purchase their products or services up to a maximum dollar amount and you have 15, 30, 60 or 90 days to pay the bill in full. So if you’re set-up on Net 30 terms and were to purchase $300 worth of goods today, then that $300 is due within the next 30 days.
Always apply first without using your SSN. Some vendors will request it and some will even tell you on the phone they need to have it, but submit first without it. When your first Net 30 account reports your “tradeline” to Dun & Bradstreet, the DUNS system will automatically activate your file if it isn’t already. This is also true for Experian and Equifax.