3 Easy Steps To Help You Build Good Business Credit
Do you want to start your own business? Do you have a great
business idea? If so, now all you need is business credit. That
way you'll be able to borrow money against your business without
having to dip into your personal savings or use your personal
credit. This means less risk for you, the owner. Some credit
reporting agencies sell a business FICO score based on both the
risk of the business and the personal credit of the owner. In
some instances, the owner's personal credit is linked to the
business credit, but it's best to keep them separate if you can.
Building your business credit will be completely different from
how you buildt your personal credit rate. You also won't have
the same credit protection with business credit, that you do
with personal credit.
There are certain steps that you can follow to help make sure
your business credit gets off to a great start.
First, you must set up the proper business structure and take
the proper steps to ensure your business appears stable to the
business credit bureaus. That means getting the right
occupational licenses, establish a corporate structure and build
a business credit profile. A business credit profile will help
you to build business credit without using your personal credit.
There are many benefits of having a business credit profile. For
one, you will have more cash for the business, convenience in
purchasing, protection of your personal assets, limiting of
personal liability from the business, and the ability to prepare
your business for future lending needs.
Secondly, you need to borrow or buy products and services from
companies that will report your credit history to the major
business credit reporting agencies such as Dunn and Bradstreet
and Experian. Unlike personal credit ratings or FICO scores;
your income or income potential, will play a huge roll in your
business credit scores. The top FICO scores are reserved for the
largest most stable businesses. But don't be discouraged, with a
little time, your business FICO score will skyrocket!
Next, in order to enter the business credit market, you'll need
to do a business credit assessment to determine if you comply
with the lender and credit bureau's requirements. A great place
to start is to look for businesses that issue credit without the
need for established business or personal credit checks or
guarantees. Once you have transacted business with these vendors
on credit, you'll be able to use those credit references to
build your credit profile with the credit reporting agencies.
In many states, you can find non-profit organizations and/or
government organizations that will help you with setting up
business credit. There are often loans available for start-up
businesses and sometimes even government grants. Check your
state government web sites for such organizations. Many retired
owners and businessmen will volunteer to help start-up
businesses. By researching your options prior to a business
start-up; you will not be struggling later with questions. With
any luck building your business credit will be a smooth
transaction with a huge net profit for you in the end!