You might be familiar with how personal credit scores work, especially how there are factors that improve or destroy them. As a business, your business credit is entirely separate from personal credit. However, much like personal credit, the better your score, the better chances you have of securing loans or working with lenders. Even if your business is new, you should still prepare for the future. You might not be thinking about taking out a loan at the moment, but that day might come sooner than you think. So, you may be thinking “What Do I Have To Do To Build Business Credit”? KAB Credit Services can show you how.
What Is Business Credit?
Business Credit allows businesses to qualify for financing. Much like personal credit scores, businesses also have credit scores and reports. The major business credit bureaus are Dun & Bradstreet, Experian, and Equifax. All of these bureaus keep a record of debt payments and other information on businesses.
Lenders, creditors, suppliers, insurance companies and other organizations can access your business credit report. They can use it to evaluate an application for insurance or a business deal. Having good business credit can lower insurance premiums or interest rates. Additionally, building business credit can help you separate your personal finances from your business finances.
Regina Buckley helps ambitious business owners just like you to take control of your business finances and leverage business credit options to build a successful business. The number one myth of building business credit that most people have is thinking that business and personal credit are reported on the same report.
What Do I Have To Do To Build Business Credit?
Building business credit may seem like a daunting task, but it does not have to be. Let us look at the steps you need to take to build business credit.
Check Your Business Credit Score and Personal Credit Score
Do you know your business credit score? Does your business have credit? If you do not’ know the answers to these questions, then it’s time to check your credit score. It is essential to keep up with your business credit report regularly so that you know where you stand. Personal credit reports can be accessed for free. However, business credit reports need to be paid for. All of the business credit bureaus (Dun & Bradstreet, Equifax, and Experian) will allow you to access your business credit for a fee.
Much like personal credit, there are also different types of business credit scores.
FICO, Dun & Bradstreet, Experian, and Equifax all generate their own business credit scores. Certain lenders and vendors can also turn to specialty business credit reports when evaluating your business. If your business is new, some lenders might even check your personal credit.
Obtain a Federal Tax ID Number (EIN)
A Federal Tax Identification number or EIN is like a social security number for your business. You will need an EIN in order to change your business entity. You may also need to create a bank account under your business’s name and EIN. An EIN is also essential for business contracts and forms.
Get The Right Business Classification
It is recommended that you make your business a distinct legal entity. Choose a business structure such as an LLC, LLP, or corporation. When you get incorporated or become an LLC, you are legally separating your business and personal credit profile and assets. Keep in mind that sole proprietorships do not create a separate business entity. If you choose to become a sole proprietor, then your business and personal credit history will be legally attached. In the event that you ever get sued, your personal assets might be at risk.
Apply For A Business Credit Card and Business Account
Opening up a business credit card is one of the best ways to establish business credit. As a business, you should have at least one business card. However, multiple cards can also help to build your credit. Keep in mind to not overextend yourself. Just because the credit is available does not mean you should utilize all of it.
When you use a business credit card, you will have a business credit profile available with the credit bureaus. Also, there are benefits and rewards that you can receive for using business credit cards.
Monitor Your Business Credit History and Reports
Get into the habit of monitoring your business credit reports. Keep an eye out on your credit utilization. Many lenders want to see less than 30% of your total available credit used before they approve you for additional financing. Additionally, look at your credit limit across all credit cards. Make sure you are using less than 30% or less of what you have access to. This will increase your chances of getting approved for a business loan.
Errors and fraudulent activities can impact your business’s credit and business credit score. At KAB Credit Services, we show our clients how to look our for errors or dispute anything that looks inaccurate.
Our Business Finance Suite From KAB Credit Services
Both new and existing small business owners are always looking for ways to finance their business and keep track of their financial information. At KAB Credit Services, our Business Finance Suite is part of our Business Credit Builder Membership.
With our Business Finance Suite, you can build credit for your business that is linked to your EIN number instead of your social security number. This business credit does not require personal credit checks or personal guarantee for approval. Even if you are just starting your company, and even if you have no collateral or cashflow
Build Business Credit In 30 Days
At KAB Credit Services, we have been helping businesses build their business credit and qualify for the loans they deserve. We will help you get business credit for your company without having to resort to using your personal credit or SSN.
Who We Are – KAB Credit Services
At KAB Credit Services, our mission is to help entrepreneurs obtain the capital and credit they need to fuel their dreams. Whether you are just starting your business or looking for millions in capital to expand, we have solutions that can help you fund your endeavors. KAB Credit Services is We are dedicated to helping you get business credit and financing for your company. Call us to schedule a FREE consultation. Do you have any questions or comments? Send us a message.