Building business credit is similar to building personal credit, but there are a few key differences. Here are some steps you can take to build your business credit:
- Register your business: Make sure your business is legally registered with the state and that you have an Employer Identification Number (EIN) from the IRS.
- Obtain a business credit file: Register your business with the three major business credit reporting agencies (Experian, Dun & Bradstreet, and Equifax). This will establish your business credit file.
- Open a business bank account: Separating your personal and business finances is important for building your business credit. Opening a business bank account will also help you establish a business credit file.
- Get a business credit card: Apply for a business credit card and use it responsibly. Make sure to pay the balance in full and on time every month.
- Establish trade lines: Trade lines are credit accounts that you have with suppliers and vendors. Establishing trade lines can help you build your business credit over time.
- Be consistent: Make sure to use your business name consistently, including in all legal and financial documents.
- Monitor your credit report: Regularly check your business credit report to ensure the information is accurate, and to check for any fraudulent activity.
It is worth noting that building business credit takes time, so it’s important to be patient and consistent with your efforts. Keep in mind that the better your personal credit score, the easier it will be to build your business credit. It’s also important to be mindful of the credit utilization ratio, which is the amount of credit you’re using compared to the amount of credit available.