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Establish a positive business credit history
Why establishing business credit is important
Like your personal credit, your business has its own separate business credit reports and scores. Lenders, suppliers, and insurance companies can check these reports when evaluating your business. Building a strong credit profile for your company makes it easier to qualify for affordable funding, get trade credit and lower your costs. It’s one way to give your business an unfair advantage.
Access to Cash
At some point your business may need money to grow, expand or just get through a rough patch. Building your credit profile makes sure your can qualify for funding whenever you need it.
Get More Time to Pay
Your suppliers check your business credit before extending your trade credit (net 30, 60, or 90- day terms). Strong credit gives you more time to pay for your products and services, so it’s easier to manage cash flow.
Lower Your Costs
Lenders and insurance companies can check your business credit when setting your rates. Building your business credit scores can help you get approved for the lowest-cost loans, credit cards and insurance.
Protect Personal Credit
You can kill your personal credit scores if you max out personal credit cards to to fund your business. Establishing and using credit in your business’s name can help protect your personal credit if things go south.
Things you should know before you begin
Use the name of your business
Open credit and other trade accounts in the name of your business and start establishing your business credit. You should also put whatever business accounts you have in the name of your business.
Business Name, LLC
Business Address
1234 Service St.
Businessville, CA, 88888
Do use the name of your business
John Doe
Home Address
555 Home St.
Hometown, CA, 88888
Don’t use your personal information when at all possible.
Be Consistent
Make sure that you use the same name, address and information that you used when establishing your business entity and registering with the business credit bureaus.
Business Name, LLC
Business Name, LLC
Business Name, LLC
Do use the name of your business consistently.
Business Name, LLC
Business Name
Business Name, Inc. LLC
Don’t use variations or abbreviations of your business name.
Start building business credit
Step 1
Get a business credit card that reports to the business credit bureaus.
Ink Business Cash® Credit Card
Capital One Spark Classic for Business
Make payments on time
Depending on the bureau, 50% or more of your business credit score is based on your payment history. Paying even one day late will affect your score. In the case of the D&B PAYDEX® score, you can earn an even higher score by paying your bills early!
Step 2
Open at least 2 trade accounts with companies that report to the business credit bureaus.
A minimum of 3 experiences are needed to calculate a D&B PAYDEX® score, with a minimum of 2 unique trade suppliers.
Opening a line of credit or trade account is a good way to start establishing a healthy credit payment history for your business, especially for purchases you regularly make.
Pro Tip
Securing and using 2 lines of credit before continuing will greatly increse the likelihood that you’ll be succcessful in the following step.
Step 3
Once you’ve established credit with 2 of the above, choose 3-5 from the following list.
Recommended
Monitor the full details of your business credit reports with a Nav Premium account, and much more
Recommended
Our team of credit & lending experts can guide you through the process of getting your D&B PAYDEX® Score. Schedule a free call, today!
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