5 Steps to Build Your Small Business Credit

Credit is important and there are a few ways for a small business to build credit. A small company will be able to leverage their capital and expand their business when they use credit. There are a few things you can do to build the credit.

  1. Establish personal credit. Many lenders are willing to offer business credit to individuals who have strong personal credit. This means a history of timely repayment of debt and a credit score of 620 or higher.
  2. Establish your company. Having a solid business plan that outlines the history, current purpose and long term goals of your company increases your chances of being approved for business credit. Obtain the appropriate licenses and an EIN (employer identification number), as well as maintain accurate records of your business operations.
  3. Apply for small business credit cards. Use these cards for company related purchases only, and use them regularly. Two or three company credit cards is enough to build small business credit. There is no need to have five, eight or ten.
  4. Pay your bills on time. Business credit scores rely heavily on the timely repayment of debt. Late payments can lower your score significantly.
  5. Review your business credit score with Paydax, Experian, and/or D&B (Dun and Bradstreet). These business credit reporting agencies will monitor your credit similar to the way that person credit is reviewed. Your company credit score takes into account current payment status, trade relationships, usage to limit ratio, payment history, and public records (such as collections). The type, age, and size of your business is also considered. Make sure that your company is being properly reported to these agencies by reviewing your business credit profile approximately every six months to one year.


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