Building business credit is crucial for any growing company. A strong business
credit profile can help you secure loans, negotiate better terms with suppliers,
and manage cash flow more effectively. Here’s a comprehensive guide to getting
started on the right foot.
Step 1: Set Up Your Business Properly
Before you can start building business credit, you need to ensure that your
business is properly set up. This involves a few key steps:
- Obtain a Tax ID Number (EIN): This is your business’s identification
number, similar to a social security number for individuals. You can apply for an
EIN through the IRS website. - Establish a Business Address: Whether you use a physical office space or
a virtual office, make sure your business has a legitimate and professional
address. - Open Business Bank Accounts: Separate your personal and business
finances by opening dedicated business bank accounts. This will not only help
with accounting but also establish your business as a separate legal entity.
Step 2: Sign Up for NAV and eCredable Memberships
To boost your business credit quickly, consider signing up for memberships that
can assist you in this process:
- NAV Membership: NAV offers tools and resources to help you monitor and
build your business credit. Sign up for their membership here to get access to
your credit reports and scores, as well as personalized
recommendations for improving your credit profile.
- eCredable Membership: Another useful service is eCredable, which can
report your business’s utility payments and other non-traditional credit data to
major business credit bureaus. Sign up for their membership here to enhance
your credit profile further.
Step 3: Obtain a DUNS Number
A DUNS Number from Dun & Bradstreet is essential for establishing your business credit profile. You can apply for a free DUNS Number on the Dun & Bradstreet website. This number will be used by creditors and suppliers to assess your business’s creditworthiness.
Step 4: Utilize Net 30 Accounts
One of the fastest ways to build business credit is by using net 30 accounts. These accounts allow you to purchase goods and pay for them within 30 days. NAV can help you find vendors that offer net 30 terms.
– **Pay On Time**: It’s crucial never to be late with these payments, as there is no grace period. To ensure timely payments, consider paying as soon as you receive the goods. For instance, if you order paper for your printer, pay the invoice as soon as the paper arrives.
Step 5: Monitor Your Progress
After a week, log in to your NAV dashboard to review the vendors available to you. NAV will show you a variety of vendors from whom you can purchase items for your business. As you continue to make timely payments, your business credit will improve.
Step 6: Explore Business Credit Card Offers
Once your business credit starts to build, you can look for credit card offers that match your business needs. NAV can also help you identify the best credit card options based on your current credit profile. Over time, you’ll be able to qualify for major credit cards, which can be beneficial for business travel and other expenses.
Building business credit is a step-by-step process that requires careful planning and diligence. By setting up your business correctly, leveraging memberships like NAV and eCredable, using net 30 accounts wisely, and monitoring your progress, you can establish a strong business credit profile. This will open up more opportunities for financing and growth, paving the way for your business’s success.
Cheers to your success with building healthy business credit~
Jeanne
www.JeanneKelly.net