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Your Ultimate Guide to Building Business Credit Fast

Did you know that half of all small business startups do not survive longer than five years? No one ever said that starting a new business is easy.

One of the most common reasons for failure is a lack of funding or working capital. Startups simply do not have enough money to maintain operations.

But you can mitigate this risk by establishing business credit. And the fastest way to build business credit is to follow the steps outlined in this article.

What is Business Credit?

If you already have a good understanding of business credit, you can skip this section. But if you’re like most entrepreneurs, business credit is a bit of a mystery. What is it? Why do you need it? Fortunately, building business credit is not as complicated or time-consuming as you might think. In fact, it’s the fastest way to improve your company’s financial standing.

Business credit is simply a measure of your company’s financial health. Similar to your personal credit score, business credit is used by lenders to determine whether or not your company is a good risk. A strong business credit score indicates that you are a responsible borrower who is likely to repay your debts on time. Conversely, a low score can make it difficult to obtain funding and may result in higher interest rates.

Building strong business credit takes time and effort, but it is well worth the investment. After all, strong business credit is one of the best ways to ensure access to the funding you need to grow your company. Without it, your new startup is at risk of failure. It’s unrealistic to expect revenue to cover all of your expenses in the beginning. A business line of credit is a lifeline that gives your new company a chance to grow.

So we’ve put together the ultimate guide to help you – it’s the fastest way to build business credit!

How Long Does it Take to Build Business Credit?

By establishing a strong business credit score, you can qualify for lower interest rates on loans and lines of credit, demonstrate your financial responsibility to vendors, and improve your chances of being approved for leases and contracts. But how long does it take to build business credit?

Unfortunately, there is no easy answer. While some businesses may be able to establish a good business credit score in a matter of months, others may take years. But by following the tips in this guide, you can begin the process of building business credit fast!

Finish Setting Up Your Business

On the personal credit side, the primary way that lenders assess your creditworthiness is via a social security number (SSN). Obviously, your small business does not have a SSN. So how do lenders even know that your small business exists?

There are certain things you can do to make your business more noticeable and let lenders know you’re a legitimate business they can work with. These things include incorporating/forming an LLC, setting up a business bank account, getting an Employer Identification Number (EIN), and getting a Data Universal Numbering System (DUNS) number.

We’re going to take some time to dive deeper into these so you can be on your way to building business credit fast!

Incorporate or Form an LLC

Many small business owners find it difficult to obtain loans and other forms of financing due to their lack of business credit. However, by forming an LLC, small business owners can take advantage of a number of ways to build business credit.

How to Build Business Credit for an LLC
LLCs can obtain a business credit card in the company name, which can help to establish a positive payment history. LLCs can also often get favorable terms on loans and lines of credit by using the company’s assets as collateral.

Can a Sole Proprietor Build Business Credit?
Can a sole proprietor build business credit? The answer is yes, but it’s not as easy as it is for an LLC.

When you’re a sole proprietor, your personal and business credit are intertwined. That means if you have bad personal credit, it will be harder to get approved for business loans and Lines of Credit (LOCs).

On the other hand, if you have good personal credit, you can use it to help build your business credit. The best way to do this is by getting a business credit card in your company’s name and using it responsibly.

So a sole proprietor can build business credit, but it may be easier or harder for you depending on your personal credit score and credit history.

Set Up a Business Bank Account

In order to set yourself apart, it’s important to distinguish between your personal affairs and your business. Having a separate bank account for your business will also help you establish a relationship with a financial institution and can provide you with the ability to access lines of credit in the future.

And, it can help you to better manage your finances and can give you a clear picture of your spending habits. This information will help you make smarter decisions about your business expenses as well.

Build Business Credit with EIN

One way to build business credit is by getting an employer identification number (EIN). This is a nine-digit number issued by the IRS that is used to identify businesses for tax purposes. When you apply for an EIN, you will need to provide some basic information about your business, such as the legal name and address. You will also need to have a Social Security Number or individual taxpayer identification number.

Once you have obtained an EIN, you can use it to open a business bank account, apply for a business credit card, and more.

Building Business Credit with DUNS Number

A Data Universal Numbering System (DUNS) number is a unique nine-digit identifier assigned to businesses by Dun & Bradstreet, a leading provider of business information.

By obtaining a DUNS number, businesses can establish a credit file and begin to build a credit history. This, in turn, will make it easier to obtain financing in the future. In addition, having a DUNS number can help businesses win bids on contracts and obtain better terms from suppliers. As such, obtaining a DUNS number is an important step for any business that is serious about building its credit.

How to Build Business Credit History

The best way to establish business credit is to start by building a strong personal credit history. This means making all of your debt payments on time, keeping your balances low, and using a mix of different types of credit products.

Once you have a solid personal credit history, you can begin to establish business credit by applying for a business credit card and paying the balance in full and on time each month. You can also look into securing a small business loan from a bank or other lending institution.

Keep reading, because we’re going to dive deeper into how to get credit cards for building business credit, as well as how to take out a business credit builder loan.

Can You Build Business Credit with Bad Personal Credit?
Can you build business credit with bad personal credit? The answer is yes, but it depends on the type of business you have.

If you are a sole proprietor, your personal credit will be used to determine your business credit. However, if you are incorporated or an LLC, your business credit will be separate from your personal credit. This means that you can build business credit even if you have bad personal credit.

Get Credit Cards for Building Business Credit

Now that your business footprint is established, it’s time to build business credit. The best way to do this is by taking out a business credit card.

Your business’s credit score is based on a number of different factors. Perhaps the most important one is making on-time payments. Late payments tell lenders that you are not reliable and are a risk to default on any debt.

It’s important that you don’t rack up too much debt as a percentage of your credit limit. This is the way that lenders assess whether the business debt is too high.

Take Out a Business Credit Builder Loan

Another way to build business credit is to take out a business credit builder loan. A business credit builder loan can help entrepreneurs build their business credit. This type of loan is designed for businesses that do not have established credit. The lender will report the loan to the business credit reporting agencies, which will help the business build a credit history.

Then, like a credit card, it’s your responsibility to make on-time loan payments each month. This will help improve your credit history, which will better your chances of getting approved for future loans and lines of credit. It can also help you get better terms on loans, such as a lower interest rate.

Build Your Business Credit Score

Now that you have an established credit history, it is important to keep up with it in order to build your business credit score. D&B, Experian, and Equifax are three of the major credit reporting bureaus that you should be checking in with regularly, and here’s why.

It is possible to have errors, or incorrect information reported, and this can negatively affect your business credit score. So you want to make sure you catch these errors immediately. If you notice anything questionable on your business credit score report, you can work with the reporting bureaus to correct the record.

Credit reporting agencies will also oftentimes suggest action steps that you can take to help you build business credit fast, so it’s worthwhile to keep an eye on these reports if you want to continue to build your business credit score.

Work With a Business Credit Builder Program

If you’re just starting out, building business credit on your own can seem overwhelming, so one option is to work with a business credit builder program. The program will work with you to identify the best ways to improve your credit rating and help you implement those strategies. The goal of the program is to help you build business credit so that you can obtain financing and grow your business.

There are many different business credit builder programs available, and each one has its own strengths and weaknesses. Some of the most popular programs include Dun & Bradstreet Credibility Corp, Experian Business Credit Advantage, and Business Credit Canada. These programs can all help you build business credit, but they each have their own unique features and benefits. Do your research to find the program that best suits your needs.

To Wrap it all Up

Business credit is vital for any business owner that wants to maintain a good reputation with lenders and keep their personal and business finances separate. It can be tough to figure out the best way to build business credit, but we’re here to help.

At the School for Startups, we’ll teach you everything you need to know about starting and running a successful business – including how to build up your business credit so that you can get the financing you need down the road. Get started today and let us help you take your business to the next level! Go ahead, send in your application – we can’t wait to work with you and see what you and your business are capable of!

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