Learn How to Build Business Credit Fast – We Show You the Easy Way!

You want to know how to build business credit fast? Don’t worry; we’ve got you covered.

Every Small Business Needs to Know How to Build Business Credit Fast

Business credit is credit in a business’s name. It doesn’t tie to an owner’s individual credit, not even if the owner is a sole proprietor and the only employee of the small business.

As such, a business owner’s business and consumer credit scores can be very different.

The Advantages

Due to the fact that business credit is distinct from individual, it helps to secure a small business owner’s personal assets, in case of litigation or business bankruptcy.

Also, with two separate credit scores, an entrepreneur can get two different cards from the same vendor. This effectively doubles purchasing power.

Another benefit is that even start-ups can do this. Heading to a bank for a business loan can be a formula for disappointment. But building company credit, when done the right way, is a plan for success.

Personal credit scores rely on payments but also various other factors like credit utilization percentages.

But for business credit, the scores really just depend on whether a company pays its debts on a timely basis.

How to Build Business Credit Fast

Building company credit is a process, and it does not occur automatically. A company needs to proactively work to build business credit.

That being said, it can be done easily and quickly, and it is much quicker than developing individual credit scores.

Vendors are a big aspect of this process.

Undertaking the steps out of sequence will cause repetitive denials. No one can start at the top with small business credit. For instance, you can’t start with retail or cash credit from your bank. If you do, you’ll get a rejection 100% of the time.

Small Business Fundability

A company needs to be fundable to credit issuers and vendors.

Therefore, a business will need a professional-looking website and email address. And it needs to have website hosting bought from a merchant like GoDaddy.

Additionally, business phone and fax numbers should have a listing on ListYourself.net.

At the same time, the company phone number should be toll-free (800 exchange or the equivalent).

A company will also need a bank account devoted strictly to it, and it needs to have all of the licenses essential for operation.

Licenses

These licenses all have to be in the specific, correct name of the business. And they need to have the same business address and telephone numbers.

So note, that this means not just state licenses, but possibly also city licenses.

Learn more here and get started toward building company credit.

Dealing with the Internal Revenue Service

Visit the Internal Revenue Service web site and acquire an EIN for the business. They’re free of charge. Pick a business entity such as corporation, LLC, etc.

A business can begin as a sole proprietor. But they will probably wish to change to a sort of corporation or an LLC.

This is in order to diminish risk. And it will take full advantage of tax benefits.

A business entity will matter when it concerns taxes and liability in case of a lawsuit. A sole proprietorship means the business owner is it when it comes to liability and tax obligations. No one else is responsible.

Sole Proprietors Take Note

If you run a company as a sole proprietor, then at the very least be sure to file for a DBA. This is ‘doing business as’ status.

If you do not, then your personal name is the same as the business name. Hence, you can find yourself being personally accountable for all business financial obligations.

Plus, according to the IRS, with this arrangement there is a 1 in 7 chance of an IRS audit. There is a 1 in 50 probability for corporations! Avoid confusion and considerably decrease the odds of an Internal Revenue Service audit as well.

Starting Off: How to Build Business Credit Fast

Begin at the D&B web site and get a free D-U-N-S number. A D-U-N-S number is how D&B gets a business in their system, to generate a PAYDEX score. If there is no D-U-N-S number, then there is no record and no PAYDEX score.

Once in D&B’s system, search Equifax and Experian’s websites for the small business. You can do this at fastcs.wpengine.com/reports. If there is a record with them, check it for correctness and completeness. If there are no records with them, go to the next step in the process.

By doing this, Experian and Equifax will have activity to report on.

How to Build Business Credit Fast with the Vendor Credit Tier

First you should build trade lines that report. This is also called the vendor credit tier. Then you’ll have an established credit profile, and you’ll get a business credit score.

And with an established business credit profile and score you can start to obtain credit in the retail and cash credit tiers.

These varieties of accounts often tend to be for the things bought all the time, like marketing materials, shipping boxes, outdoor work wear, ink and toner, and office furniture.

But first off, what is trade credit? These trade lines are credit issuers who will give you preliminary credit when you have none now. Terms are generally Net 30, rather than revolving.

So, if you get approval for $1,000 in vendor credit and use all of it, you must pay that money back in a set term, like within 30 days on a Net 30 account.

Details

Net 30 accounts need to be paid in full within 30 days. 60 accounts have to be paid fully within 60 days. In comparison with revolving accounts, you have a set time when you have to pay back what you borrowed or the credit you made use of.

To start your business credit profile the right way, you ought to get approval for vendor accounts that report to the business credit reporting bureaus. As soon as that’s done, you can then use the credit.

Then pay back what you used, and the account is on report to Dun & Bradstreet, Experian, or Equifax.

Vendor Credit Tier – It Makes Sense

Not every vendor can help in the same way true starter credit can. These are merchants that will grant an approval with hardly any effort. You also need them to be reporting to one or more of the big three CRAs: Dun & Bradstreet, Equifax, and Experian.

You want 5 to 8 of these to move onto the next step, which is the retail credit tier. But you may have to apply more than once to these vendors. So, this is to confirm you are reliable and will pay promptly. Here are some stellar choices from us: https://oldcs.creditsuite.com/blog/5-vendor-accounts-that-build-your-business-credit/

How to Build Business Credit Fast with the Accounts That Don’t Report

Non-Reporting Trade Accounts can also be helpful. While you do want trade accounts to report to at least one of the CRAs, a trade account which does not report can yet be of some worth.

You can always ask non-reporting accounts for trade references. Also credit accounts of any sort will help you to better even out business expenses, thus making financial planning less complicated. These are companies like PayPal Credit, T-Mobile, and Best Buy.

How to Build Business Credit Fast with the Retail Credit Tier

Once there are 5 to 8 or more vendor trade accounts reporting to at least one of the CRAs, then move onto the retail credit tier. These are companies such as Office Depot and Staples.

Only use your Social Security Number and date of birth on these applications for verification purposes. For credit checks and guarantees, use the business’s EIN on these credit applications.

One example is Lowe’s. They report to D&B, Equifax and Business Experian. They want to see a D-U-N-S and a PAYDEX score of 78 or higher.

How to Build Business Credit Fast with the Fleet Credit Tier

Are there 8 to 10 accounts reporting? Then move onto the fleet credit tier. These are businesses such as BP and Conoco. Use this credit to buy fuel, and to fix, and take care of vehicles. Only use your Social Security Number and date of birth on these applications for verification purposes. For credit checks and guarantees, make sure to apply using the small business’s EIN.

One such example is Shell. They report to D&B and Business Experian. They need to see a PAYDEX Score of 78 or more and a 411 business telephone listing.

Shell may claim they want a certain amount of time in business or profits. But if you already have enough vendor accounts, that won’t be necessary. And you can still get approval.

Learn more here and get started toward building company credit.

How to Build Business Credit Fast with the Cash Credit Tier

Have you been sensibly managing the credit you’ve gotten up to this point? Then progress to the cash credit tier. These are businesses like Visa and MasterCard. Only use your Social Security Number and date of birth on these applications for verification purposes. For credit checks and guarantees, use your EIN instead.

One example is the Fuelman MasterCard. They report to D&B and Equifax Business. They need to see a PAYDEX Score of 78 or better. And they also want you to have 10 trade lines reporting on your D&B report.

Plus, they want to see a $10,000 high credit limit reporting on your D&B report (other account reporting).

Plus, they want you to have an established small business.

These are companies such as Walmart and Dell, and also Home Depot, BP, and Racetrac. These are often MasterCard credit cards. If you have 14 trade accounts reporting, then these are doable.

Learn more here and get started toward building company credit.

Monitor Your Business Credit

Know what is happening with your credit. Make certain it is being reported and take care of any errors as soon as possible. Get in the habit of checking credit reports and digging into the specifics, and not just the scores.

We can help you monitor business credit at Experian and D&B for 90% less than it would cost you at the CRAs. See: fastcs.wpengine.com/monitoring.

Update Your Information

Update the relevant information if there are mistakes or the info is incomplete. At D&B, you can do this at: https://iupdate.dnb.com/iUpdate/viewiUpdateHome.htm. For Experian, go here: www.experian.com/small-business/business-credit-information.jsp. So for Equifax, go here: www.equifax.com/business/small-business.

Fix Your Business Credit

So, what’s all this monitoring for? It’s to dispute any errors in your records. Mistakes in your credit report(s) can be taken care of. But the CRAs typically want you to dispute in a particular way.

Disputes

Disputing credit report mistakes commonly means you mail a paper letter with duplicates of any proofs of payment with it. These are documents like receipts and cancelled checks. Never mail the original copies. Always send copies and keep the originals.

Fixing credit report inaccuracies also means you precisely detail any charges you contest. Make your dispute letter as clear as possible. Be specific about the concerns with your report. Use certified mail so that you will have proof that you mailed in your dispute.

A Word about How to Build Business Credit Fast

Always use credit responsibly! Don’t borrow beyond what you can pay back. Monitor balances and deadlines for repayments. Paying off punctually and fully will do more to raise business credit scores than pretty much anything else.

Building business credit pays. Great business credit scores help a business get loans. Your credit issuer knows the small business can pay its debts. They know the business is for real.

The company’s EIN links to high scores and loan providers won’t feel the need to require a personal guarantee.

Takeaway for How to Build Business Credit Fast

Business credit is an asset which can help your small business for years to come. Learn more here and get started toward establishing business credit.