Business credit is a requirement if you want to qualify for financing. Like individuals, businesses also have credit reports which are monitored by the business credit bureaus Dun & Bradstreet, Equifax, and Experian.
If you want to apply for credit or insurance or plan to do a business deal, your business credit report may be used by lenders, creditors, insurance companies, or suppliers in order to evaluate the health of your business.
To help you establish your business credit faster so that you can achieve your plans and goals for your business, follow these 3 steps.
This is the first step to establishing business credit. You will need to first obtain a phone number for your business, apply for an Employer Identification Number (EIN) with the IRS, and obtain a business bank account in your official (legal) business name.
Once you have completed those steps, you can use Experian’s BizVerify service to establish a credit file with Experian. Then do the same with Equifax. Finally, apply for a DUNS number with Dun & Bradstreet.
If you don’t have a credit file yet with any credit bureaus, simply make sure that suppliers you work with report your payments to the credit bureaus.
If you haven’t already, you should consider incorporating your business or becoming an LLC. This will help to legally separate your business and personal credit profiles so that they are no longer legally attached.
Continuing to operate as a sole proprietor means that you won’t be able to establish a business credit history and your personal assets will also still be at risk in the event that your business is ever sued.
Like any credit situation, the most important rule to establishing good business credit is to make sure that you pay your bills on time. If you have debt, you should make sure that you are effectively managing it and paying it off.
Late payments and delinquent payments can damage your business credit rating and harm your credit profile.