How to Build Credit For an LLC

How to Build Credit For an LLC

How to Build Credit For an LLC

Hey, you have a business credit score. No, not your personal credit score, but a score entirely based on your business’s ability to pay bills on time, among several other factors. You want a healthy business credit profile for the same reasons you want a solid personal credit profile; you have better access to financing, you can qualify for lower interest rates, and you can secure desirable working relationships. Where potential employers often check your personal credit during your background check, vendors can check your business credit profile before going into business with you. You can also check up on your profile before making any business moves for free with Nav.

Now that you’re salivating at the mouth and just DYING to get started on a stronger business credit profile, let’s take a look at some ways you can build business credit for your LLC.

Separate Personal and Business Finances

While it’s not uncommon for small business owners to use their own money to fund their business at the start, far too many run their business expenses through their personal bank accounts and on their personal credit. According to a survey done by Nav, 70% of small business owners without a business checking account were denied for a business loan in the past two years. As well,

You’ve grown and developed the concept of your business over time, it’s time for the business to move out of your house and into its own space. After incorporating your LLC (which you should do right from the start), it’s time to set up bank accounts for your business and start applying for business financing or credit cards to build your business’s credit profile.

Seek Financing Options For Startups

When dealing with personal credit, there are certainly financing options for individuals with no credit history or very little history. Thus it is with business credit. Fortunately, you aren’t limited to absurd interest rates or mediocre-at-best rewards as a startup business.

There is a whole slew of business credit cards for startups that offer attractive rates and worthwhile rewards. Take a moment to think over the needs of your business and which rewards make the most sense for how you operate, chances are you’ll find a card that works for you.

Any time you apply for financing for your business, you’ll likely be asked to provide your name and social security number or tax ID if you’re the authorized individual on the account. For some of these startup cards and potentially future financing options, your personal credit score can make up where your young or less-than-stellar business credit score falls short. By locking down a card or other mode of financing with favorable terms early, you can begin making your payments on time and start working on your credit profile.

Know What Bureaus Your Cards Report To

In terms of building business credit, not all cards report equally to the business credit bureaus. Because this reporting is entirely voluntary, they can pick and choose which bureaus they communicate with and those they don’t. Fortunately for you, our experts here at Nav reached out to some of the major credit card companies to learn which bureaus they report to and which they didn’t. Here’s a breakdown of that info.

By choosing a card wisely, you can start working on a credit profile that spans multiple bureaus, rather than having your diligent bill-paying go unnoticed.

With persistence, diligence, and determination on your part, you can produce a credit profile that will impress lenders and vendors alike and take your business to new heights.

This article was originally written on July 3, 2018 and updated on June 4, 2019.

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2 responses to “How to Build Credit For an LLC

  1. Thank you for the information. I am ready to establish business? Where do I start? I need help
    Please advise. Thank you.