Do You Need to Build Business Credit Fast? We Can Help

When you are starting your brand-new business, there is so much to think about. From your expected location to how you are actually going to pay for the things you have to pay for, it can be overwhelming. You need to climb the credit wall.

Too often, business credit is an afterthought, as in after it is already too late. Either you rely on your personal credit until you max it out because it is easier and already established, or business credit doesn’t even cross your mind until you need it and don’t have it.

Why do you need separate business credit? Here’s why. According to Inc.com, small business owners who understand their business credit scores are 41% more likely to get approval when they apply for a business loan. You can’t understand it if you don’t have it. Right?

Also, if the unthinkable happens and your personal credit goes south, you need to be able to continue to run and grow your business. If your business credit is strong, you can still do that regardless of what is happening with your personal credit.

While it is true a new business will not have any business credit, it doesn’t have to be that way for long. There are ways to build business credit fast so that when the time comes, you can keep your personal credit separate and finance business growth using your business credit.

It does take time, but it can take less time if you follow some simple steps from the beginning. If you are already past the beginning, never fear. These tips can work for your business too. Start where you are at and keep moving forward.

Here are our Top 10 tips for how to climb the credit wall:

1. Climb the Credit Wall: Incorporate

There is more than one way to go about this. You can either form a corporation, an S-corp, or a Limited Liability Corporation. Smaller businesses usually do better with S-corp status as opposed to forming a corporation due to the time and cost. An LLC is even cheaper and faster, and it serves the purpose well.

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The main difference between the three, other than the time and cost required, are the levels of liability to the owner personally, and taxation.  An S-corp is a way to incorporate without the double taxation you would get by forming a corporation.

If your main reason for incorporation is to separate your business for the purpose of building business credit fast, an LLC is probably the way to go.

Another alternative is to operate under a DBA (Doing Business As). It provides the separation needed but does not offer any personal protection.

2. Get a Business Phone Number

Your business needs its own phone number. A toll-free number works best, and you need to get it listed in all the directories under the business name and business address. Don’t forget to list it on ListYourself.net and your company website, if you have one. Few people use a phone book anymore. Almost everyone looks up phone numbers online. Make yours separate from your personal number and easy to find.

3. Climb the Credit Wall: Open a Separate Business Bank Account

If you are extremely small or just starting out, this may seem unnecessary until you grow or become more established. But it is best to do this from the beginning if possible, however. Having a separate business banking account makes it easier to keep up with and report business finances, both income and expenses. It also further separates your business from your personal finances.

That separation is imperative to building business credit fast, and it helps at tax time as well.

4. Check with All your Vendors to Ensure they Report to the Credit Agencies

They don’t have to, and a lot of them don’t. If you have vendors that do, keep them. If they do not, ask them if they will. Some are happy to do it. Try to replace those vendors that do not and will not report on time payments to the credit agencies.  CreditSuite.com has a list of vendors that report here.

It may not be possible in some cases, but the more vendors you have reporting, the better.

5.  Climb the Credit Wall: Consider Working with a Starter Vendor

If you have trouble finding vendors that will report, try using a starter vendor such as Quill.com. They offer everything from standard office supplies to furniture, snacks, and even coffee. They will report to Dun & Bradstreet, the most commonly used of the three business credit agencies, every quarter.

Application for credit with Quill is easy. All you have to do is add whatever you need to your shopping cart, select “open an account” at check out, then choose the invoice option.

This is a quick and easy way to get payments to vendors reported on your business credit report, which is again, essential to building business credit fast.

6. Talk to Utilities About Reporting On Time Payments to Credit Agencies

Similar to vendors, they do not have to report on time payments. Some of them will, however. You will not likely have as many options for switching utility providers if they will not report, but it never hurts to ask. The more payments you have reported each month, the faster your business credit will build.

7. Climb the Credit Wall: Obtain a Business Credit Card

Even if your credit is less than stellar or non-existent, you can usually still complete this step. You may have a low credit limit, high interest rate, or both, but take what you can get. The goal in the beginning is to open a revolving line of credit and make consistent, on time payments.

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You can do this by simply charging office snacks or cleaning supplies, or even pencils and notebooks, and then paying them off each month. It doesn’t hurt to pay it off over the course of a couple of months. Most people don’t know this, but carrying a balance for a short amount of time can actually help build you climb the credit wall.

The important thing to remember is that you absolutely cannot charge things that you cannot already afford to buy. You have to know the cash is there.

Once you do this for a bit, you will be able to upgrade to a small business credit card with better terms. You may be able to get a lower interest rate and a higher limit. In addition, you may qualify for a card that offers perks such as cash back or 0% interest.

8. Get a Small Business Loan

While getting approval for a small business loan from traditional lenders without established credit or with poor credit may be near impossible, there are other options. The internet is replete with alternative lenders that are much easier to work with.

Consider obtaining a small loan or line of credit from one of these lenders and remember to make your payments on time every month.

9. Climb the Credit Wall: Pay Bills on Time

Did I say that already? It is so important is needs to be said again and it deserves its own number. Numbers 3 through 8, with the exception of #6 and possibly #7, involve taking on new debt.

You have to pay utilities anyway, and if you have an established relationship with vendors that report to the credit agencies, that isn’t exactly new debt.

The rest of those tips absolutely involve taking on new debt. It may seem this is counterproductive to the end goal. But you cannot build business credit without making payments on debt.

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You cannot climb the credit wall without paying debt from several different types of creditors.

If you do not make your payments on time however, you cannot build business credit at all. In fact, you will accomplish the exact opposite, and with all that new debt it could create a downward spiral of which you cannot pull out.

Pay your bills on time.

Let me repeat myself: pay your bills on time.

10. Monitor Your Progress

Because you will catch mistakes faster, this step could end up increasing the speed at which your business credit builds after all.

You have to look at your credit report on a regular basis. You can do this by either purchasing a report from Dun & Bradstreet, Equifax, and Experian, or you can join a credit monitoring service.

Though going through the three credit agencies directly may seem more efficient, the fact is they are expensive and you only get a picture of what is going on with your credit at that time.  The next time you check it you have to spend the same amount of money, again.

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A credit monitoring service, such as the one offered by CreditSuite.com, offers a real time picture throughout the year and ends up being much more cost effective.

You can watch how fast your business credit builds, and you catch mistakes as they happen. If you do see a mistake, report it immediately, in detail and with as much supporting documentation as possible. Remember to never send originals, only copies.

It Is Possible to Build Business Credit Fast and Climb the Credit Wall

While it will not happen overnight, it doesn’t have to take years, either. Even just six months of consistent, on-time payments to a mix of vendors, business credit cards, utilities, and small business lenders can make a huge difference.

If you are already an established business, but you have your personal finances all mixed up with your business finances, it’s never too late. Just start where you are. Start the process of separation, and then follow the rest of the steps.

Before you know it, your business credit will make it possible for you to grow and expand your business in ways you never knew were possible. Learn more here and start to climb the credit wall.