Start Building Corporate Credit – We Show You How

Building corporate credit is within your reach! Do you truly know about building corporate credit? We break down just what you need to know and show you what will work.

Every Establishment Needs to be Building Corporate Credit

Corporate credit is credit in a company’s name. It doesn’t link to an owner’s consumer credit, not even when the owner is a sole proprietor and the only employee of the company.

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

The Advantages

Due to the fact that corporate credit is independent from personal, it helps to secure an entrepreneur’s personal assets, in the event of court action or business insolvency.

Also, with two distinct credit scores, a business owner can get two separate cards from the same vendor. This effectively doubles buying power.

Another benefit is that even startup businesses can do this. Visiting a bank for a business loan can be a formula for frustration. But building company credit, when done properly, is a plan for success.

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

But for company credit, the scores really just depend on whether a corporation pays its debts in a timely manner.

The Process

Building corporate credit is a process, and it does not occur without effort. A corporation has to actively work to build corporate credit.

Nevertheless, it can be done readily and quickly, and it is much quicker than building personal credit scores.

Merchants are a big part of this process.

Doing the steps out of order will cause repetitive rejections. No one can start at the top with corporate 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.

Business Fundability

A corporation must be fundable to lending institutions and merchants.

That’s why, a corporation will need a professional-looking web site and e-mail address. And it needs to have site hosting bought from a supplier such as GoDaddy.

In addition, business telephone and fax numbers need to have a listing on ListYourself.net.

Additionally, the company phone number should be toll-free (800 exchange or comparable).

A business will also need a bank account dedicated strictly to it, and it has to have all of the licenses essential for operation.

Licenses

These licenses all must be in the accurate, appropriate name of the company. And they need to have the same company address and telephone numbers.

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

 

Learn more here and get started toward building corporate credit.

Dealing with the IRS

Visit the Internal Revenue Service website and get an EIN for the company. They’re free of charge. Pick a business entity like corporation, LLC, etc.

A company can get started as a sole proprietor. But they will most likely want to change to a form of corporation or an LLC.

This is in order to reduce risk. And it will maximize tax benefits.

A business entity will matter when it involves taxes and liability in the event of a lawsuit. A sole proprietorship means the entrepreneur is it when it comes to liability and tax obligations. Nobody else is responsible.

Sole Proprietors Take Note

If you operate a small business as a sole proprietor, seriously consider incorporating.

If you do not, then your personal name is the same as the business name. As a result, you can wind up being directly accountable for all small business financial obligations.

Plus, per the Internal Revenue Service, by having this arrangement there is a 1 in 7 probability of an IRS audit. There is a 1 in 50 chance for corporations! Steer clear of confusion and significantly lower the chances of an Internal Revenue Service audit simultaneously.

Starting the Process of Building Corporate Credit

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 company in their system, to produce 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 company. You can do this at fastcs.wpengine.com/reports. If there is a record with them, check it for accuracy and completeness. If there are no records with them, go to the next step in the process.

This way, Experian and Equifax will have activity to report on.

Vendor Credit Tier

First you ought to establish trade lines that report. This is also referred to as the vendor credit tier. Then you’ll have an established credit profile, and you’ll get a corporate credit score.

And with an established corporate credit profile and score you can begin 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 to start with, what is trade credit? These trade lines are credit issuers who will give you starter credit when you have none now. Terms are in most cases Net 30, rather than revolving.

Therefore, if you get an approval for $1,000 in vendor credit and use all of it, you will need to 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 need to be paid completely within 60 days. In comparison with revolving accounts, you have a set time when you must pay back what you borrowed or the credit you used.

To kick off your corporate credit profile the right way, you need to get approval for vendor accounts that report to the business credit reporting bureaus. As soon as that’s done, you can then make use of the credit.

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

Vendor Credit Tier – It Helps

Not every vendor can help in the same way true starter credit can. These are vendors that will grant an approval with marginal 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 need to apply more than once to these vendors. So, this is to verify you are dependable and will pay timely.

Retail Credit Tier

Once there are 5 to 8 or more vendor trade accounts reporting to at least one of the CRAs, then move to the retail credit tier. These are companies like 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 such 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 better.

 

Learn more here and get started toward building corporate credit.

Fleet Credit Tier

Are there 8 to 10 accounts reporting? Then move to the fleet credit tier. These are service providers like BP and Conoco. Use this credit to buy fuel, and to repair, and take care of vehicles. Only use your SSN and date of birth on these applications for verification purposes. For credit checks and guarantees, make certain to apply using the business’s EIN.

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

Shell may say 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.

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 higher. 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).

In addition, they want you to have an established corporation.

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

 

Learn more here and get started toward building corporate credit.

Building Corporate Credit: Monitoring

Know what is happening with your credit. Make certain it is being reported and attend to any errors ASAP. Get in the habit of taking a look at credit reports and digging into the specifics, and not just the scores.

We can help you monitor corporate credit at Experian and D&B for only $24/month. See: fastcs.wpengine.com/monitoring.

Update Your Record

Update the details if there are inaccuracies or the information 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. And for Equifax, go here: www.equifax.com/business/small-business.

Building Corporate Credit: Fixing Errors

So, what’s all this monitoring for? It’s to contest any inaccuracies in your records. Errors in your credit report(s) can be fixed. But the CRAs normally want you to dispute in a particular way.

Disputes

Disputing credit report errors usually means you send a paper letter with duplicates of any evidence of payment with it. These are documents like receipts and cancelled checks. Never mail the original copies. Always send copies and retain the originals.

Fixing credit report inaccuracies also means you specifically itemize 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 sent in your dispute.

A Word about Building Corporate Credit

Always use credit sensibly! Never borrow more than what you can pay off. Monitor balances and deadlines for repayments. Paying off promptly and in full will do more to increase corporate credit scores than pretty much anything else.

Establishing corporate credit pays off. Excellent corporate credit scores help a business get loans. Your credit issuer knows the company can pay its debts. They understand the business is bona fide.

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

Takeaway

Corporate credit is an asset which can help your corporation for years to come. Learn more here and get started toward establishing corporate credit.