Do You Know How to Establish Business Credit Fast?

Do you really know how to establish business credit fast? We break down just what you need to know and show you what will work.

How to Establish Business Credit Fast: Every Business Needs Business Credit Building

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

Therefore, a business owner’s business and individual credit scores can be very different.

How to Establish Business Credit Fast: The Benefits

Since small business credit is distinct from consumer, it helps to safeguard an entrepreneur’s personal assets, in case of a lawsuit or business bankruptcy.

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

Another advantage is that even startup companies can do this. Going to a bank for a business loan can be a recipe for frustration. But building small business credit, when done the right way, is a plan for success.

Individual credit scores are dependent on payments but also various other considerations like credit use percentages.

But for company credit, the scores truly just depend on if a business pays its invoices promptly.

The Process

Growing small business credit is a process, and it does not occur without effort. A small business will need to actively work to establish company credit.

However, it can be done easily and quickly, and it is much more efficient than establishing personal credit scores.

Vendors are a big aspect of this process.

Accomplishing the steps out of sequence will cause repetitive rejections. 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 denial 100% of the time.

How to Establish Business Credit Fast: Business Fundability

A small business needs to be fundable to credit issuers and vendors.

For that reason, a small business will need a professional-looking website and email address. And it needs to have website hosting from a company such as GoDaddy.

In addition, company telephone and fax numbers ought to have a listing on 411. You can do that here: http://www.listyourself.net.

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

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

Licenses

These licenses all have to be in the specific, accurate name of the company. And they must have the same business address and phone numbers.

So keep in mind, that this means not just state licenses, but potentially also city licenses.

Learn more here and get started toward establishing small business credit.

How to Establish Business Credit Fast: Dealing with the IRS

Visit the Internal Revenue Service web site and obtain an EIN for the business. They’re totally free. Select a business entity such as corporation, LLC, etc.

A company can begin as a sole proprietor. But they will probably want to switch to a sort of corporation or an LLC.

This is in order to limit risk. And it will make best use of tax benefits.

A business entity will matter when it pertains to taxes and liability in the event of litigation. A sole proprietorship means the business owner is it when it comes to liability and taxes. 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 company name. Therefore, you can find yourself being personally responsible for all company financial obligations.

Plus, per the Internal Revenue Service, using this arrangement there is a 1 in 7 possibility of an IRS audit. There is a 1 in 50 possibility for corporations! Avoid confusion and considerably lower the chances of an Internal Revenue Service audit at the same time.

How to Establish Business Credit Fast: Starting Off the Business Credit Reporting Process

Begin at the D&B web site and obtain a cost-free D-U-N-S number. A D-U-N-S number is how D&B gets a business 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 sites for the 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 so, Experian and Equifax will have something to report on.

Vendor Credit Tier

First you need to build 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 business credit score.

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

These types 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 preliminary credit when you have none now. Terms are commonly Net 30, rather than revolving.

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

Details

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

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

Then repay 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 like true starter credit can. These are merchants that will grant an approval with hardly any effort. You also want 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 validate you are dependable and will pay timely. Here are some stellar choices from us: https://oldcs.creditsuite.com/blog/5-vendor-accounts-that-build-your-business-credit/

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 service providers like Office Depot and Staples.

Just use your SSN 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 instance 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 more.

Fleet Credit Tier

Are there 8 to 10 accounts reporting? Then move onto the fleet credit tier. These are companies such as BP and Conoco. Use this credit to buy fuel, and to fix, 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 small business telephone listing.

Shell might say they want a certain amount of time in business or revenue. But if you already have sufficient vendor accounts, that won’t be necessary. And you can still get approval.

Learn more here and get started toward establishing small business credit.

Cash Credit Tier

Have you been sensibly handling the credit you’ve up to this point? Then progress to the cash credit tier. These are service providers such as Visa and MasterCard. Just 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 such example is the Fuelman MasterCard. They report to D&B and Equifax Business. They want 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).

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

These are businesses 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 establishing small business credit.

How to Establish Business Credit Fast: Monitor Your Business Credit

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

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

At Equifax, you can monitor your account at: www.equifax.com/business/business-credit-monitor-small-business. Experian is about $19.99.

Update Your Records

Update the details if there are mistakes or the data 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.

How to Establish Business Credit Fast: Fix Your Business Credit

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

Get your company’s PAYDEX report at: www.dnb.com/about-us/our-data.html. Get your company’s Experian report at: www.businesscreditfacts.com/pdp.aspx?pg=SearchForm. And get your Equifax business credit report at: www.equifax.com/business/credit-information.

Disputes

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

Fixing credit report inaccuracies also means you specifically 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.

Dispute your or your small business’s Equifax report by following the directions here: www.equifax.com/small-business-faqs/#Dispute-FAQs.

You can dispute errors on your or your small business’s Experian report by following the directions here: www.experian.com/small-business/business-credit-information.jsp.

And D&B’s PAYDEX Customer Service contact number is here: www.dandb.com/glossary/paydex.

How to Establish Business Credit Fast: A Word about Business Credit Building

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

Building company credit pays off. Great business credit scores help a company get loans. Your loan provider knows the business can pay its financial obligations. They understand the small business is bona fide.

The small business’s EIN links to high scores and loan providers won’t feel the need to call for a personal guarantee.

How to Establish Business Credit Fast: Takeaways

Business credit is an asset which can help your company in years to come. Learn more here and get started toward building small business credit. This is how to establish business credit fast!