The Essential Business Credit Starter Pack for Your LLC

The Essential Business Credit Starter Pack for Your LLC

The Essential Business Credit Starter Pack for Your LLC

When starting a business, entrepreneurs often feel a lot of pressure to do a lot quickly. Pick a business name. Create a website. Set up a business entity. Get a business bank account. 

These steps are all important to set your business up for long-term success and need to get done. Since you probably don’t have time to waste, you’ll want to pick the most efficient options available. 

Building business credit should be on your to do list, because the sooner you get started, the sooner you can build a good business credit history. 

Here’s a simple business credit starter program you can use to jumpstart the process. 

Understand that you can use these steps and tools whether you operate as an LLC, corporation or even a sole proprietorship.

How Do I Establish Business Credit for the First Time?

If you want to understand how to establish business credit, the most important step is to get accounts that will be reported to business credit bureaus, and then pay those accounts on time. Credit scores are based, for the most part, on a track record of on-time payments. Without any accounts reporting, you’ll either have no credit or low credit scores. 

Accounts that appear on business credit reports are often called “tradelines” and can include the following:

Vendor accounts

Your suppliers or vendors may offer you the option to purchase supplies or services from them and pay later. Net-30 terms refers to accounts due 30 days after the invoice date. Suppliers who offer credit may not require a personal credit check, which makes them appealing to new business owners who want to get credit without an inquiry on their personal credit.

Find easy net-30 accounts here

Business credit cards

Most business credit card issuers report payments to at least one of the major business credit bureaus. Getting a business credit card or charge card that reports to business credit can be another excellent way to help build business credit. Be sure to pay on time, and keep balances low whenever possible. 

Nav Prime

We’re calling out our own offering here, but since Nav was designed to help business owners establish and build business credit as efficiently as possible, we want to share how it can help you start business credit building.  

We’ll share more details about how it works in a moment; in the meantime, know that Nav Prime submits monthly as a tradeline to major business credit reporting agencies. 

Small business loans

Small business loans, lines of credit, equipment loans and other types of business financing can also help you build business credit if the lender reports payments to commercial credit bureaus. Instead of reporting directly to all the credit bureaus, some lenders report to the Small Business Financial Exchange (SBFE) which then makes that information available to major business credit bureaus

What Do You Need To Get Business Credit?

Before you start applying for vendor accounts or business financing, there are a few foundational steps that can be helpful. By taking these steps early on, you’ll help ensure that credit you get in the name of your business is associated with your business. 

First, make sure you have officially established your business entity. Ideally you’ll want to form a Limited Liability Company (LLC) or corporation, as that legally separates your personal and business finances. If you do not choose to form a business entity, it’s a good idea to register your business name with your state as a fictitious name or “DBA.” 

It can also be helpful to get an Employer Identification Number or EIN, and make sure you get any necessary business licenses. 

Find a complete checklist of steps you can take to make your business legit here. 

When you apply for any of the types of accounts above, some creditors will check personal credit, some check business credit, and a few won’t check credit at all. 

Make sure you know what your personal credit reports and business credit reports contain, so you can address any inaccuracies or problems before you apply.

What Credit Score Do I Need for a Business Credit Card?

It’s common for business credit card issuers to check the owner’s personal credit scores, and most business credit cards require good to excellent VantageScore or FICO scores.

A few business credit cards and charge cards do not require strong personal credit scores. 

What Are Tradelines?

Tradelines are accounts that appear on business credit reports. While the term is commonly used with vendor or supplier accounts, tradelines may also include credit cards, loans or other types of accounts that appear on business credit reports. 

How Many Business Tradelines Does My LLC Need for Good Credit?

It’s a good idea to get three or four accounts that will appear on your business credit reports, then establish an on-time payment history. 

A mix of credit–different types of accounts–is often a factor in credit scoring models. If possible, you may want to get a few different types of accounts. For example:

  • Nav Prime
  • A business credit card
  • A net-30 vendor account
  • A small business line of credit or loan

You don’t have to get all of these accounts at once, but it can be helpful to get some type of tradeline that reports and start establishing credit as soon as possible. That’s because “age of credit history” is often one of the factors that business credit scores take into account. Business owners with longer, more well established credit histories tend to score better for this factor. 

Most business credit reports don’t list the names of creditors, so as you start to get accounts make sure you are monitoring your credit reports to see which accounts report. 

Also keep in mind that some accounts will only be reported to one or two bureaus. When possible, it’s helpful to get accounts that report to multiple bureaus. 

How Long Does It Take to Build Business Credit?

The sooner you start building credit, the sooner you can build good credit. While building strong credit takes some time, here are 12 ways to establish business credit in two weeks–or at least start the process. Many business owners find they can make significant progress in a few months by getting tradelines that report and paying on time. 

Again, by monitoring your credit reports on a regular basis you can learn which accounts are reporting, and monitor your progress. 

Here are the best business credit monitoring services

What Softwares or Services Can I Use To Improve My Business Credit?

As we’ve mentioned, the key to building business credit is to get accounts that report to business credit, then pay them on time. 

Depending on the type of credit score used, other business credit score factors may include:

  • New credit & inquiries
  • Credit utilization
  • Mix of credit
  • Collection accounts
  • UCC filings
  • Public record information (bankruptcies, liens)

The best way to understand what’s impacting your business credit is to check and monitor it. Since individual credit bureaus may collect information from different sources, it’s helpful to monitor your credit from more than one bureau. 

Nav can help you monitor and manage your business credit, and understand how lenders view your business. 

With Nav Prime, you get:

  • Your business credit reports from two leading business credit reporting agencies: Equifax® and Experian™, updated monthly. Understand what information companies are reporting about your business. 
  • Business credit scores* from Equifax and Experian (Experian™ Intelliscore PlusSM V2 and Equifax® Business Delinquency Score®). Monitor your progress in building a strong business credit history with credit scores updated monthly when you log in. 
  • Personal credit reports and scores from Experian™ and TransUnion®. (Scores provided are based on Experian™ VantageScore® 3.0 and TransUnion® VantageScore® 3.0). Log in monthly to see updates. 
  • Tradeline reporting. Nav submits your monthly payments as a tradeline to major business credit reporting agencies. 
  • Credit health updates. Use credit trends, insights and score factors to position your business for growth. 

As you improve your credit standing with Nav Prime**, you can continue to benefit from features always available on Nav’s platform, including access to:

  • Personalized recommendations. Get recommendations for small business loans, financing, and business credit cards based on your business data and qualifications. 
  • Cash Flow Health tool. Connect accounts to see all your money in one place, and get actionable insights. Cash flow plus credit health create the backbone of your business’s financial health.
  • Social Health tool. Connect your Facebook and Google Business Profiles and see which reviews need your response to reply quickly and build trust. 

*Nav provides access to Experian™ Intelliscore PlusSM V2, Equifax® Business Delinquency Score®, TransUnion®VantageScore® 3.0, and Experian™ VantageScore® 3.0. VantageScore is a registered trademark of VantageScore, LLC.

**Results will vary. Scores are calculated from many variables; some users may not see improved scores.

***Based on the aggregate cost of comparable individual products if purchased directly from credit bureaus, including applicable taxes.

This article was originally written on April 26, 2024.

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