Top 10 Ways to Build Business Credit for New Businesses

Even with strong cash flow, your company needs business credit to help with funding and to reduce business expenses.

Here are 10 ways you can build business credit:

• Incorporate your Company.A C corporation, an LLC, or an S Corporation will separate your business finances from your personal finances, making it easier to build business credit.

• Apply for a Federal Tax ID.An employer identification number (EIN) links applications for credit to your company instead of your personal finances.

• Start a Business Bank Account.Use your EIN to open a business checking account, creating a separate bank reference for your business and setting the stage for obtaining credit in the future.

• Create a Business Address and Phone Number.This solidifies your business as a separate entity and allows you to register with business directories like the Better Business Bureau and Paying your phone bill also establishes a credit relationship.

• Apply with Data Universal Number System (DUNS).This nine-digit code identifies businesses and is managed by Dun & Bradstreet’s credit reporting agency. You’ll need this number to apply for government contracts or small business loans

• Buy Supplies on Credit.Purchasing inventory or materials from vendors on credit or with payment terms helps establish business credit. Be sure to pay on time and in full to build credit quickly.

• Apply for Business Credit.Obtaining and diligently repaying small loans, credit cards or lines of credit can support growth and improve your credit rating.

• Choose Lenders Working with Credit Bureaus.Make sure your good payment history is reported to business credit bureaus.

• Update Credit Bureau Information.Track Dun & Bradstreet, Equifax, and Experian records for accurate and complete reporting about your business.

• Manage Credit Responsibly.It will take time to establish business credit, but it can be accomplished with thoughtful decisions about credit options and consistent, timely credit payments.

Our team at Muth Capital can help you develop a plan for building business credit. Talk with us about the financial solutions available to help you succeed.

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