How To Build Business Credit?

One of the great benefits of starting a business is that it is possible to establish a new and separate credit profile that is distinct from your personal credit profile.

This means that although you may have poor personal credit, you can structure your new business in a manner that allows you to build a pristine credit profile for your company, allowing you to receive loans, credit cards, lines of credit, etc. that you would not be able to obtain as an individual (and often at better interest rates).

The Basic Process

To begin separating your personal credit profile from that of your company, the following are the first basic steps.

  1. Incorporate or Form an LLC
    You need to have a separate entity to build a separate credit profile. 
  2. Obtain your Federal Employer Identification Number (FEIN)
    We can prepare this form for you and/or obtain the FEIN from the IRS on your behalf when you use our incorporation or LLC Formation services.
  3. Open a Separate Business Bank Account
    Business funds and personal funds must be separate.
  4. Obtain a D-U-N-S Number
    This is a 9-digit number issued by Dun & Bradstreet that most companies utilize to verify the credit history of businesses.
  5. Compliance
    Make sure you’ve obtained all necessary business licenses, permits, etc. that are required in your jurisdiction. 
  6. Business Phone Line and Yellow Pages Listing
    Make sure your business is listed in the phone directory and the phone line is in the business name, not in your personal name.
  7. Same Business Address
    Make sure the exact same business address is used for your DUNS number, the yellow pages listing and phone number as well as on business licenses and company credit cards (that you will be applying for later). Your home address is acceptable, however, private mailboxes and P.O. boxes may not be.
  8. Apply to “New Business-friendly” Creditors
    Apply to those companies that generally grant new businesses credit cards and lines of credit without requiring a personal guarantee. These companies will then update your credit profile with the various credit agencies. This is how you initially establish a business credit profile.

That’s the basic process to setting up a new credit profile.

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