We Can Teach You How to Build Your Company Credit Score

Do you need to know how to build your company credit score? Don’t fret; we’ve got you covered.

Every Small Business Owner is Asking: How Do You Build Your Company Credit Score?

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

Consequently, an entrepreneur’s business and personal credit scores can be very different.

The Advantages

Due to the fact that small business credit is distinct from consumer, it helps to protect an entrepreneur’s personal assets, in the event of a lawsuit or business bankruptcy.

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

Another advantage is that even new ventures can do this. Heading to a bank for a business loan can be a recipe for frustration. But building business credit, when done right, is a plan for success.

Individual credit scores rely on payments but also various other considerations like credit usage percentages.

But for small business credit, the scores actually merely depend on whether a business pays its debts on time.

The Process

Establishing small business credit is a process, and it does not happen without effort. A small business must actively work to establish company credit.

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

Merchants are a big part of this process.

Accomplishing the steps out of sequence will result in repetitive rejections. Nobody can start at the top with 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.

Build Your Company Credit Score with Business Fundability

A small business needs to be fundable to loan providers and merchants.

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

And, company phone and fax numbers need to have a listing on ListYourself.net.

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

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

Licenses

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

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

Learn more here and get started toward building company credit.

Working with the Internal Revenue Service

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

A business can start off as a sole proprietor. But they will more than likely wish to switch to a variety of corporation or an LLC.

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

A business entity will matter when it involves taxes and liability in case of litigation. A sole proprietorship means the entrepreneur is it when it comes to liability and tax obligations. No one else is responsible.

Sole Proprietors Take Note

If you run a small business 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. Therefore, you can find yourself being directly responsible for all small business financial obligations.

Also, according to the IRS, using this arrangement there is a 1 in 7 probability of an IRS audit. There is a 1 in 50 chance for corporations! Avoid confusion and substantially decrease the odds of an IRS audit as well.

Starting to Build Your Company Credit Score

Start at the D&B web site and get a cost-free D-U-N-S number. A D-U-N-S number is how D&B gets a small 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.

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

Build Your Company Credit Score with the Vendor Credit Tier

First you must establish 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 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 usually Net 30, rather than revolving.

Hence, if you get approval for $1,000 in vendor credit and use all of it, you need to pay that money back in a set term, such as 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 contrast to with revolving accounts, you have a set time when you must pay back what you borrowed or the credit you used.

To begin your business credit profile properly, you should get approval for vendor accounts that report to the business credit reporting agencies. Once 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 Helps

Not every vendor can help like true starter credit can. These are vendors that will grant an approval with nominal 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 have to apply more than one time to these vendors. So, this is to verify you are reliable and will pay in a timely manner. Here are some stellar choices from us: https://oldcs.creditsuite.com/blog/5-vendor-accounts-that-build-your-business-credit/

Build Your Company Credit Score with Accounts That Don’t Report

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

You can always ask non-reporting accounts for trade references. And also credit accounts of any sort ought to help you to better even out business expenditures, thus making financial planning simpler. These are companies like PayPal Credit, T-Mobile, and Best Buy.

Build Your Company Credit Score 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 to the retail credit tier. These are companies like Office Depot and Staples.

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

One good 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 more.

Build Your Company Credit Score with the Fleet Credit Tier

Are there 8 to 10 accounts reporting? Then move to the fleet credit tier. These are companies such as BP and Conoco. Use this credit to buy fuel, and to fix, and maintain vehicles. Just use your SSN and date of birth on these applications for verification purposes. For credit checks and guarantees, make sure to apply using the company’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 higher and a 411 company phone listing.

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

Learn more here and get started toward building company credit.

Build Your Company Credit Score with the Cash Credit Tier

Have you been responsibly managing the credit you’ve gotten up to this point? Then move onto the cash credit tier. These are companies such as Visa and MasterCard. Just use your SSN 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 more. 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 service providers like Walmart and Dell, and also Home Depot, BP, and Racetrac. These are typically 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 sure it is being reported and attend to any errors ASAP. Get in the practice of taking a look at credit reports and digging into the details, 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 info if there are mistakes or the details 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 challenge any inaccuracies in your records. Mistakes in your credit report(s) can be corrected. But the CRAs normally want you to dispute in a particular way.

Get your small business’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 mistakes typically means you mail a paper letter with copies of any proof of payment with it. These are documents like receipts and cancelled checks. Never send the original copies. Always send copies and retain the original copies.

Fixing credit report errors also means you specifically detail any charges you contest. Make your dispute letter as crystal 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 How to Build Your Company Credit Score

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

Building business credit pays. Good business credit scores help a small business get loans. Your lender knows the small business can pay its financial obligations. They know the business is bona fide.

The small business’s EIN connects to high scores and credit issuers won’t feel the need to ask for a personal guarantee.

How to Build Your Company Credit Score: the Takeaway

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