Building a Credit Bureau Score for Your Business

If you are starting a business, take steps to establish and build a score with the credit bureaus.

Establish Business Entity

Many people run their businesses as sole proprietorships. However, if you want to establish business credit that is separate from your personal credit score, then you will first need to set up a business entity. You could do so in a number of ways, including setting up a corporation or LLC. Once you have an entity set up, you will have a unique tax ID number that will be used to track your business dealings.

Open and Use Credit Accounts

You next need to set up accounts through which you will buy on credit. For instance, you can open accounts with suppliers in your industry. Many suppliers will offer 60- or 90-day terms. When you are selecting suppliers, ask if they report to Dunn & Bradstreet, the main credit rating agency for businesses. You want suppliers that report to this agency because that will help you build your credit quickly. Having a business credit card account will also help establish a credit history.

The only way to increase your credit score with these accounts is to use them wisely. Purchase some things with your merchant accounts from your suppliers. Also use your credit card, but take care not to keep a large balance on the account. Instead, keep the percentage of available credit on the account high, showing that you manage your money well enough that you do not need to use the entire line of credit extended to your business.

Pay on Time

Nothing helps to build credit faster than paying your bills on time. Therefore, you need to make purchases on credit consistently and pay off the balances before the payments are due.



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