BUSINESS CREDIT 101: Establishing and Maintaining Your Business Credit

August 24, 2016

 

 

HOW DO I ESTABLISH BUSINESS CREDIT WHEN I AM STARTING OUT?

 

Getting your business credit profile started can be tricky when you are just starting out. But there are some ways you can start. Completing the above steps is the first step since it establishes your business as a separate and legal entity.

 

If you have any money in savings, use it as collateral for a small business loan from your bank. Be sure to ask that the bank report your payments to the business credit reporting companies.

 

Transfer all your regular bills for your business (like water, phone, electricity, or internet) into your business’ name.

 

Get a business credit card. Just make sure it is one that is not tied to your personal credit. If it is, you risk damaging your personal credit or losing personal assets if the business struggles.

 

Finally, talk to your suppliers and vendors. Ask them to extend you lines of credit for the materials you need to run your business. If they agree, ask them to also report to the business reporting companies on your behalf.

 

And most important of all, pay everything ON TIME!

 

 

MAINTAINING YOUR BUSINESS CREDIT

 

Once you have information on your business credit profile, you should take care to keep your record “clean”. Pay everything on time and keep your personal finances out of the mix. Keep your business lines of credit (also called trade lines) active and current by using them regularly. Inactive accounts are often closed and will no longer support your credit profile.

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