FOREX Magazine

How to get your business
ready to build a credit
history?
Building business credit from
scratch isn’t quite the same
as it is with personal credit. It
requires more than just
applying for a loan or credit
card and making on-time
payments. Here are three
steps to take to set up your
business for a credit history.
Separate your business from
your personal life
Your business typically needs
to be viewed as a separate
entity to start building a
credit history. This may
require you to incorporate
the business or form a limited
liability company.
It’s also critical that you open
a business checking account
and consider getting a
business credit card to make
sure that your business
expenses are completely
separate from your personal
finances. Make sure the
business checking account is
in your business name.
Finally, get a dedicated
business phone line and list it
under your legal business
name.
Get an employer
identification number
If you’re a sole proprietor, you
are, for all intents and
purposes, your business. But
you can’t build a business
credit history with a Social
Security number. Instead,
you’ll need to get a federal
employer identification
number (EIN).
Don’t get caught up in the
name, though. You don’t
have to employ other people
to qualify for an EIN. It’s just a
way of identifying your
business as a separate entity.
You can apply for an EIN
online for free through the IRS
website.
Register with Dun &
Bradstreet
Dun & Bradstreet created the
Data Universal Numbering
System–D-U-N-S number for
short–in 1962 to identify
business worldwide.
That number is tied to the
credit profile Dun &
Bradstreet builds on your
business. But the company
doesn’t necessarily create
one for you automatically.
If you’re a Nav customer, use
the Business Launcher tool to
see if your business already
has a DUNS number. If it
doesn’t, you can apply for
one through the same tool.
Otherwise, you can visit Dun
& Bradstreet’s website to look
up or apply for a DUNS
number.
You’ll need to provide some
basic information about
yourself and your business.
Once you submit the
application, you should
receive your number within
30 days.
5 steps to improving your
business credit
Once your business is set up
to build a credit history, what
you do next is critical to
ensuring that only positive
information gets to the three
business credit bureaus, Dun
& Bradstreet, Experian, and
Equifax.
1. Stay updated with the
credit bureaus
2. Borrow only from
lenders who report to
the credit bureaus
3. Establish tradelines
with your suppliers
4. Always pay on time or
even early
5. Avoid the big issues
The bottom lines
Building business credit
history doesn’t happen
overnight. It takes a lot of
time and effort to get where
you want to be. As you build
your business and want to
borrow affordably establish
good relationships with
suppliers, having a solid
business credit history is
essential.
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