BUSINESS CREDIT
Do you have a business and need to establish your business credit?
Let Us Help you Get started on getting your Business Credit Established: If you need
- Capital
- Supplies
- Equipment
- Vehicles (cars, vans, trucks ect...)
- Marketing Dollars
Building Business Credit
What is a Business Credit Score?
Personal credit scores rank the creditworthiness of individuals, business credit scores do the same for businesses. Personal credit scores range from 300 to 850. Business credit scores range from 0 to 100. Major business credit reporting agencies Dun & Bradstreet, Experian, and Equifax produce business credit scores and reports. FICO scores for small businesses are known as “FICO SBSS.”
If you try to compare business credit to personal credit, you’re likely to get frustrated. That’s because business credit scores differ from consumer credit scores in some key ways:
Credit Score Ranges: Personal FICO scores range between 300 to 850; business credit scores typically range between zero to 100. Paying on time to lenders and/or creditors is the best thing you can do to establish a good business credit score.
Free scores: There are over 150 places where consumers can check and monitor their consumer credit scores for free. But free business credit scores are available from a very limited number of sources, such as Nav.
Access: Anyone can check a businesses’ credit scores, unlike consumer scores which are restricted to anyone with a “permissible purpose” under federal law.
Accuracy: A study published in the Wall Street Journal found as many as 25% of business credit reports may contain errors or are missing key information. If the credit report contains mistakes, the scores produced may not accurately reflect the risk of the business.
Business Credit Info:
When you register a business (LLC, LLP, or corporation) it becomes recognized as a separate legal entity with the ability to enter into contracts. It’s treated as a separate being from you as an individual. If you operate as a sole proprietorship, it’s important to understand there is no legal or financial separation between you and your business. If that’s the case, when you obtain credit or apply for funding, all activity will be solely tied to you as an individual and reflected on your personal credit reports. To keep your business and personal finances separate, the first step is to start building credit in your company’s name. If you want to build business quickly here are five simple steps.
Step 1 : Choose the Right Business Structure
To make your business a distinct legal entity requires that you select a business structure such as an LLC, LLP or corporation. Remember, sole proprietorships do not create a separate business entity. Once you form your business entity, the next step is to register your business. This particular step is dependent on your structure and where your business is located. For additional support on choosing the right structure for your company and registration be sure to check out SBA’s Business Guide Click to check it out SBA’s Business Guide
Step 2 : Obtain a Federal Tax ID Number (EIN)
You can apply for a federal tax ID for free using the IRS assistance tool . This is a nine-digit number assigned to your company which you will use for things such as filing company tax returns, opening a business bank account, applying for licenses and permits, and applying for business credit.
Step 3 : Open a Business Bank Account
Once you have your federal tax ID, you’ll want to open a business bank account for your company. This is a mandatory step in creating a clear separation between your business and personal expenses . Your banking relationships play an important role in your company’s funding potential. Not only does your business bank account serve as a bank reference on credit applications, it also allows provides key data that lenders use during a funding review.
Step 4 : Establish Credit with Vendors/Suppliers Who Report
One of the easiest ways to build business credit is to apply for net terms with vendors and suppliers. As you buy supplies, inventory, or other materials on credit, those purchases and payments get reported to business credit reporting agencies.
Step 5 : Monitor Your Business Credit Reports
There are three major business credit reporting agencies so it’s important to monitor each of your company credit files. Each agency collects data from various sources and may have different information about your company. With an established business credit report, you may get higher credit approvals, better interest rates and repayment terms on loans and lines of credit. It’s equally important to establish a diversity of accounts with other types of business credit such as a business credit card or line of credit. Let these five simple steps serve as a starting point to building business credit for your company.
If you already have a business and just want to jump to start building your business credit contact us for pricing
If you want to start from scratch we can help you get your business credit start immediately starting as low as low as $1500. Contact us for details