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5 Awesome Ways to Build Business Credit Score

Build Business Credit Score to Get the Funding You Need

Business owners hear it all the time.  You need business credit to run a business.  You shouldn’t run your business using personal credit.  Business credit is the best way to ensure you can get the funding you need to build and grow your business.  The problem is, you don’t hear a lot about what business credit is, how to get it, or how to build business credit score.

Did you know you can’t automatically build business credit score?  That’s right. It isn’t like your personal credit score where accounts are automatically reported. You have to be intentional when you want to build business credit score.  In fact, if you have not been intentional, you may not even have business credit yet, despite the fact that you own a business.

How Do You Get Business Credit?

Before you can even begin to build business credit, you have to establish your business as an entity separate from yourself.  Here is how that happens:

You have to incorporate

This is the most decisive first step in separating your business credit from your personal credit.  When you cease operating as a sole proprietorship and incorporate your business, it will be easier for credit agencies to recognize your business separately. You have a few options.

  • C Corp

This is the most definitive separation, but it is also the most complicated and expensive.  Before choosing this option, be certain there are reasons other than establishing business credit that it needs to be done.  If it isn’t necessary for some other reason, there are other, less complicated, and less costly options.

  • S Corp

This option basically offers the same separation as the C Corp, but taxes are paid at the personal level, rather than requiring the business to be taxed as well, resulting in double taxation.  It is also cheaper than incorporating as a C Corp.  If you aren’t required to file as a C corp, this is a good alternative.

  • LLC

Forming a Limited Liability Corporation results in less liability, thus the name, and offers enough separation to serve the purpose of establishing business credit.  If you are not required to be a C Corp or S Corp, this is the easiest and most cost-effective way to create the separation of business and personal credit needed.

Share our foolproof business credit building checklist and tell your friends about how you’re building business credit the quick and easy way.

Get an EIN

You need to apply for an EIN and stop using your Social Security Number as the identifying number for your business.  Your SSN is tied to you, personally, and it is virtually guaranteed that anything connected credit-wise will end up on your personal credit reports.

The process for applying for and EIN is easy.  The IRS has an online form, and as soon as all the information is verified you receive your number.  It typically happens almost immediately.

Get a DUNS Number

Dun and Bradstreet (D&B) is the most widely used business credit reporting agency.  They issue each business on file a 9-digit DUNS number.  Application is easy and free, and once you have that number, you will be even closer to establishing credit for your business separate from your own.

Separate Contact Information

Your business needs its own phone number.  This way, when you apply for credit, you can enter contact information that is separate from your own.  When information is reported to agencies, sometimes the phone number is an identifying factor.  If you and your business share a number, that just decreases the level of separation.

Be sure you get your business phone number listed in the directory under the business name.

Business Bank Account

There has to be a dedicated business bank account.  Run all business transactions through this account.  Resist the temptation to pay personal expenses from it by paying yourself a salary instead.

build business credit score credit suite2

What if You Already have Business Credit?

The next question is, how do you build business credit score if you have business credit already, but it is bad?   How do you improve your business credit score?  It is impossible to improve on anything if you do not know what you are starting with, what you have to work with, and what you have control over.  Let’s break down where exactly your business credit score comes from and what it means.   This is important to  get a good starting point.

Dun & Bradstreet

Dun & Bradstreet offers several different types of business credit reports.  In fact, there are six different reporting options in all.  They all offer different information related to credit worthiness.  It takes all of them to get the whole picture.

The report most used is the PAYDEX.   This is probably because it is the easiest to understand.  It is the options most like the consumer FICO score.  It measures how quickly a customer makes payments and ranges from 1 to 100.  Scores of 70 or higher are acceptable.   For reference, a score of 100 shows payments are made in advance, and a score of 1 indicates that they are 120 days late, or more.

Experian Commercial

Experian uses what it calls Intelliscore as its credit ranking.  There are more than 800 different factors that they use to predict a company’s credit risk. With Intelliscore, a score of 76 or higher indicates a low risk of default or late payment. If a score falls between 51 to 75, it indicates a low to medium risk.  Scores from 26 to 50 are medium risk, and from 25 down to 1 is medium high to high risk.

Experian Commercial offers a number of other scores as well, similar to Dun & Bradstreet.

Equifax Business

Equifax gets its business credit data in ways similar to D&B and Experian.  They get Net 30 type industry trade credit information from a wide variety of suppliers that provide products and services to businesses on an invoice basis.

In addition, they use financial data with this industry trade data, and they add in utility and telephone payment data.  They also use public records information.

Share our foolproof business credit building checklist and tell your friends about how you’re building business credit the quick and easy way.

 Equifax Business credit scores include:

  • The Small Business Credit Risk Score for Suppliers

It is scored on a scale of 1 to 100, with 90+ indicating that a business has paid its obligations as agreed.  An 80 to 89 means they are 1 to 30 days past due, 60 to 79 indicates they are 31-60 days overdue, 40 to 59 is 61 to 90 days past the payment date.  It  just goes down from there.

  • Business Failure Risk Score

This score indicates the chance of a company paying its bills late on the following scale:

  • 497 – 816: 25% or less chance of payment being overdue
  • 452 – 496: 26 – 50% chance of payment going overdue
  • 415 – 451: 51 – 74% chance of delinquent payments

FICO SBSS

The FICO SBSS is the business version of your personal FICO credit score. It is becoming increasingly more common for lenders to use this score, rather than the Experian or even the D&B PAYDEX business credit score.

Unlike your personal FICO, the SBSS reports on a scale of 0 to 300. Of course, the higher the better, but most lenders require a score of at least 160.

This is a lot different from other business credit scoring models because it combines your business credit score, personal credit score, and other financial information such as business assets and revenue. It is a total global financial picture rolled into one score.

How Do You Know What Your Score Is?

Unfortunately, there are not a lot of ways to find out what your business credit score is without paying. Find  out how to get business credit reports for free here.  Most options do not work on a continual basis however.  You will eventually have to pay.

The prices are not cheap. Here are the prices for the top 3 business credit reporting agencies:

  • Dun & Bradstreet reports range in price from $61 to $229 per report.
  • Experian reports are $49.95 per report.
  • Equifax is $99.95 per report.

As for your FICO SBSS, that is a whole other story.  You cannot really get a copy of it because it will be different from lender to lender.  They system calculates a score based on what the lender tells it to look for.  This means the lender can weight certain aspects of the calculation. For example, if one lender says that they want the personal credit history to be heavily weighted and another prefers to focus on another type of debt, those two lenders will have two different scores.  Meanwhile, another lender may leave out student loans all together.  The next may not want any personal credit information at all.  With the huge number of possibilities, you could feasibly have a different FICO SBSS score every time.

With Credit Suite, you can monitor your scores with Dun & Bradstreet and Experian for a fraction of the cost. Get more information here.

5 Way to Build Business Credit Score

Once you understand  where it comes from, what it is, and what it means, you can get to work and build business credit score.  Here are some of our favorite tips.

1.      Get more accounts reporting

The fastest way to build business credit score is to get as many accounts as possible reporting on-time payments.  The fastest way to do this is to work with starter vendors.

These are vendors that will offer net terms on invoices without a credit check.  After you pay, they will report those payments to the credit agencies. As more and more of these vendors report your payments, your business credit score will start to grow.

Another way to get more accounts reporting on-time payments is to ask vendors you already work with to report.  You pay things like rent, utilities, and your telephone bill each month.  Sometimes if you ask them, they will report those payments.  They are not required to though.

2.      Dispute Mistakes on Your Credit Report

This is one thing that a lot of business owners do not realize they can do to build business credit score. Once you are able to see your business credit report, be sure to dispute any mistakes you find.  Do this in writing.  When you send the letter, you have to be very detailed about what the mistake is.  Be clear about the correct information, and send copies of supporting documents.  These are documents like receipts and cancelled checks. Additionally, use certified mail to send dispute information.  .

Dispute your or your business’s Equifax report by following the instructions here: www.equifax.com/small-business-faqs/#Dispute-FAQs.

You can dispute mistakes on your or your business’s Experian report by following the instructions here: www.experian.com/small-business/business-credit-information.jsp.

And D&B’s PAYDEX Customer Service contact number is here: www.dandb.com/glossary/paydex.

Share our foolproof business credit building checklist and tell your friends about how you’re building business credit the quick and easy way.

3.      Do Business with SBFE Members

The Small Business Finance Exchange collects information from its members for their database.  They then provide this information to partner credit agencies.  These credit agencies can then distribute that information to other SBFE members seeking credit data on potential borrowers.  Consequently, by doing business with members of the Small Business Exchange, you ensure that the credit agencies have as much information as possible related to your business.

4.         Work on Credit Utilization

It’s important to remember that using too much of your available credit can cause problems.  Your credit utilization, as indicated by your debt-to-credit ratio, needs to stay as low as possible.  So you cannot use up every bit of credit you have.  Carrying balances close to your limits will raise this ratio.  As a result, your credit score will go down.  Granted, you need to carry balances and make payments to get those payments reported.  However, avoid getting too close to your limits.

5.         Don’t Forget About Your Personal Credit Score

Despite the fact that business credit is separate from your personal credit, there are some business credit reporting agencies, like Experian Business and FICO SBSS, that use your personal credit history in the calculation.  As a result, it is possible for a poor personal credit score to have a negative effect on your business credit score.  So don’t neglect it.

Follow These Tips and You Can Build Business Credit Score

Here’s the thing.  It will not do you any good to get more accounts reporting, correct mistakes, or work with SBFE members if you are not making payments on time.  Regardless of how much credit you have available and how little you are using, not paying will tank your score fast.  Hence, it will totally negate any progress you make to build business credit score.  You just have to pay, on-time, and consistently.

Whether you are starting from scratch or trying to build up a bad score, trying to build business credit score can be completely overwhelming.  Honestly, you have to start somewhere though, right?  These tips can help you find a good starting point, and from there you just keep swimming.

 

The post 5 Awesome Ways to Build Business Credit Score appeared first on Credit Suite.

What’s the Best Way to Build Business Credit? We Have the Secret!

Learn the Best Way to Build Business Credit We can show you the best way to build business credit! Get the kind of business funding that can take your business to new heights! The Best Way to Build Business Credit – But What’s Business Credit, Anyway? Small business credit is credit in a business’s name. … Continue reading What’s the Best Way to Build Business Credit? We Have the Secret!

What’s the Best Way to Build Business Credit? We Have the Secret!

Learn the Best Way to Build Business Credit

We can show you the best way to build business credit! Get the kind of business funding that can take your business to new heights!

The Best Way to Build Business Credit – But What’s Business Credit, Anyway?

Small business credit is credit in a business’s name. It doesn’t link to a business owner’s personal credit, not even if the owner is a sole proprietor and the sole employee of the small business.

Accordingly, a business owner’s business and individual credit scores can be very different.

The Benefits

Because business credit is distinct from consumer, it helps to secure a business owner’s personal assets, in the event of a lawsuit or business bankruptcy.

Also, with two separate credit scores, a business owner can get two different cards from the same merchant. This effectively doubles buying power.

Another benefit is that even start-ups can do this. Heading to a bank for a business loan can be a recipe for frustration. But building company credit, when done the right way, is a plan for success.

Individual credit scores rely on payments but also various other factors like credit usage percentages.

But for company credit, the scores actually just hinge on whether a company pays its debts on a timely basis.

The Best Way to Build Business Credit – The Process

Building business credit is a process, and it does not occur automatically. A business will need to actively work to build company credit.

Nonetheless, it can be done easily and quickly, and it is much speedier than building consumer credit scores.

Merchants are a big aspect of this process.

Undertaking the steps out of order will lead to repetitive rejections. Nobody can start at the top with business credit. For example, you can’t start with retail or cash credit from your bank. If you do, you’ll get a denial 100% of the time.

The Best Way to Build Business Credit – Enhancing Company Fundability

A company must be fundable to credit issuers and vendors.

Therefore, a company will need a professional-looking web site and email address. And it needs to have site hosting bought from a vendor like GoDaddy.

Also, business telephone and fax numbers must have a listing on ListYourself.net.

Also, the business telephone number should be toll-free (800 exchange or comparable).

A business will also need a bank account dedicated strictly to it, and it needs to have all of the licenses essential for operation.

Licenses

These licenses all have to be in the exact, appropriate name of the company. And they need to have the same business address and telephone numbers.

So bear in mind, that this means not just state licenses, but possibly also city licenses.

Learn more here and get started toward establishing small business credit.

The Best Way to Build Business Credit – Working with the IRS

Visit the IRS website and get an EIN for the small business. They’re totally free. Select a business entity such as corporation, LLC, etc.

A company can begin as a sole proprietor. But they will more than likely wish to change to a type of corporation or an LLC.

This is in order to limit risk. And it will optimize tax benefits.

A business entity will matter when it pertains to taxes and liability in case of litigation. A sole proprietorship means the owner is it when it comes to liability and tax obligations. No one else is responsible.

Sole Proprietors Take Note

If you operate a business as a sole proprietor, then at the very least be sure to file for a DBA. This is ‘doing business as’ status.

If you do not, then your personal name is the same as the company name. Hence, you can wind up being personally accountable for all small business debts.

In addition, according to the IRS, by having this arrangement there is a 1 in 7 possibility of an IRS audit. There is a 1 in 50 possibility for corporations! Avoid confusion and significantly reduce the chances of an Internal Revenue Service audit as well.

The Best Way to Build Business Credit – Starting Off the Business Credit Reporting Process

Begin at the D&B website and obtain a cost-free D-U-N-S number. A D-U-N-S number is how D&B gets a small business into their system, to produce a PAYDEX score. If there is no D-U-N-S number, then there is no record and no PAYDEX score.

Once in D&B’s system, search Equifax and Experian’s web sites for the business. You can do this at www.creditsuite.com/reports. If there is a record with them, check it for correctness and completeness. If there are no records with them, go to the next step in the process.

By doing this, Experian and Equifax will have something to report on.

Vendor Credit Tier

First you should build trade lines that report. This is also known as the vendor credit tier. Then you’ll have an established credit profile, and you’ll get a business credit score.

And with an established business credit profile and score you can begin to obtain credit in the retail and cash credit tiers.

These kinds of accounts tend to be for the things bought all the time, like marketing materials, shipping boxes, outdoor work wear, ink and toner, and office furniture.

But first off, what is trade credit? These trade lines are credit issuers who will give you starter credit when you have none now. Terms are often Net 30, versus revolving.

Hence, if you get approval for $1,000 in vendor credit and use all of it, you need to pay that money back in a set term, like within 30 days on a Net 30 account.

Details

Net 30 accounts have to be paid in full within 30 days. 60 accounts need to be paid in full within 60 days. In comparison with revolving accounts, you have a set time when you have to pay back what you borrowed or the credit you made use of.

To begin your business credit profile the proper way, you should get approval for vendor accounts that report to the business credit reporting agencies. When that’s done, you can then make use of the credit.

Then pay back what you used, and the account is on report to Dun & Bradstreet, Experian, or Equifax.

Best Way to Establish Company Credit Suite

Vendor Credit Tier – It Helps

Not every vendor can help in the same way true starter credit can. These are vendors that will grant an approval with very little effort. You also need them to be reporting to one or more of the big three CRAs: Dun & Bradstreet, Equifax, and Experian.

You want 5 to 8 of these to move onto the next step, which is the retail credit tier. But you may have to apply more than once to these vendors. So, this is to verify you are dependable and will pay punctually. Here are some stellar choices from us: https://www.creditsuite.com/blog/5-vendor-accounts-that-build-your-business-credit/

The Best Way to Build Business Credit – Accounts That Do Not Report

Non-Reporting Trade Accounts can also be helpful. While you do want trade accounts to report to a minimum of one of the CRAs, a trade account which does not report can yet be of some worth.

You can always ask non-reporting accounts for trade references. And also credit accounts of any sort will help you to better even out business expenditures, thereby making budgeting less complicated. These are companies like PayPal Credit, T-Mobile, and Best Buy.

Retail Credit Tier

Once there are 5 to 8 or more vendor trade accounts reporting to at least one of the CRAs, then move to the retail credit tier. These are service providers like Office Depot and Staples.

Just use your SSN and date of birth on these applications for verification purposes. For credit checks and guarantees, use the small business’s EIN on these credit applications.

One good example is Lowe’s. They report to D&B, Equifax and Business Experian. They need to see a D-U-N-S and a PAYDEX score of 78 or higher.

Fleet Credit Tier

Are there 8 to 10 accounts reporting? Then move to the fleet credit tier. These are companies such as BP and Conoco. Use this credit to purchase fuel, and to fix, and maintain vehicles. Only use your SSN and date of birth on these applications for verification purposes. For credit checks and guarantees, make sure to apply using the business’s EIN.

One such example is Shell. They report to D&B and Business Experian. They want to see a PAYDEX Score of 78 or better and a 411 business phone listing.

Shell might say they want a specific amount of time in business or revenue. But if you already have enough vendor accounts, that won’t be necessary. And you can still get approval.

Learn more here and get started toward establishing small business credit.

Cash Credit Tier

Have you been responsibly handling the credit you’ve up to this point? Then move to the cash credit tier. These are businesses such as Visa and MasterCard. Just use your SSN and date of birth on these applications for verification purposes. For credit checks and guarantees, use your EIN instead.

One example is the Fuelman MasterCard. They report to D&B and Equifax Business. They want to see a PAYDEX Score of 78 or higher. And they also want you to have 10 trade lines reporting on your D&B report.

Plus, they want to see a $10,000 high credit limit reporting on your D&B report (other account reporting).

Additionally, they want you to have an established company.

These are businesses such as Walmart and Dell, and also Home Depot, BP, and Racetrac. These are normally MasterCard credit cards. If you have 14 trade accounts reporting, then these are doable.

Learn more here and get started toward establishing small business credit.

The Best Way to Build Business Credit – Monitor Your Business Credit

Know what is happening with your credit. Make certain it is being reported and deal with any inaccuracies ASAP. Get in the habit of taking a look at credit reports and digging into the specifics, and not just the scores.

We can help you monitor business credit at Experian and D&B for 90% less than it would cost you at the CRAs. See: www.creditsuite.com/monitoring.

At Equifax, you can monitor your account at: www.equifax.com/business/business-credit-monitor-small-business. Equifax costs about $19.99.

Update Your Data

Update the data if there are mistakes or the data is incomplete. At D&B, you can do this at: https://iupdate.dnb.com/iUpdate/viewiUpdateHome.htm. For Experian, go here: www.experian.com/small-business/business-credit-information.jsp. So for Equifax, go here: www.equifax.com/business/small-business.

The Best Way to Build Business Credit – Fix Your Business Credit

So, what’s all this monitoring for? It’s to challenge any inaccuracies in your records. Mistakes in your credit report(s) can be taken care of. But the CRAs normally want you to dispute in a particular way.

Get your company’s PAYDEX report at: www.dnb.com/about-us/our-data.html. Get your company’s Experian report at: www.businesscreditfacts.com/pdp.aspx?pg=SearchForm. And get your Equifax business credit report at: www.equifax.com/business/credit-information.

Disputes

Disputing credit report inaccuracies generally means you mail a paper letter with duplicates of any proof of payment with it. These are documents like receipts and cancelled checks. Never mail the original copies. Always send copies and keep the original copies.

Fixing credit report inaccuracies also means you precisely itemize any charges you dispute. Make your dispute letter as clear as possible. Be specific about the concerns with your report. Use certified mail so that you will have proof that you mailed in your dispute.

The Best Way to Build Business Credit – A Word about Building Business Credit

Always use credit smartly! Don’t borrow more than what you can pay off. Monitor balances and deadlines for payments. Paying promptly and in full will do more to raise business credit scores than nearly anything else.

Building company credit pays. Good business credit scores help a small business get loans. Your credit issuer knows the small business can pay its financial obligations. They recognize the small business is bona fide.

The business’s EIN links to high scores and lenders won’t feel the need to ask for a personal guarantee.

The Best Way to Build Business Credit – Takeaways

Business credit is an asset which can help your company for many years to come. Learn more here and get started toward growing small business credit.

 

The post What’s the Best Way to Build Business Credit? We Have the Secret! appeared first on Credit Suite.

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Forge Your Fortress: Build a Company Credit Report You Can Be Proud Of

Build a Wall Around Your Business Kingdom with a Strong Company Credit Report

Similar to building a kingdom, a strong company credit report does not happen overnight.  It takes years of hard work and dedication to build a business credit score and report you can be proud of.  You have to start from the bottom, with basically nothing, and work methodically through a process.  It isn’t a hard process, but it does take time, which means you need to start as soon as possible.

In the long run, it is completely worth the time and dedication necessary to build a solid company credit score, because once you do, your business and your personal assets are both protected. Your business has the power of strong business credit on its side.  Your personal finances, on the other hand, will be unaffected by any enemy that may attack the business.  It’s a win-win.

So how do you do it?  Where do you start?  What does it really take to build a company credit report you can be proud of?

Hit the jackpot with our best webinar and its trustworthy list of seven vendors who can help you build business credit.

Conquer the Land: Business Fundability

Establishing small business credit is a process, and it does not happen automatically. A company will need to proactively work to establish business credit. Nonetheless, it can be done readily and quickly, and it is much more rapid than developing personal credit scores.

Before you can ever begin building a kingdom, you must first conquer the land for yourself.  In company credit report terms, that means making your business fundable. There are a few things you need to do to make this happen.

  • You need a professional-looking website and email address. The website address needs to be bought from a supplier such as GoDaddy. In addition, the email address needs to have the same URL.  It shouldn’t be a from a free email platform like Yahoo or Gmail.
  • The company telephone and fax numbers should be different from your personal numbers, and they need to have a listing on ListYourself.net.
  • Additionally, the company phone number should be toll-free.
  • A business bank account devoted strictly to the company is always a must.
  • Visit the IRS web site and get an EIN for the company. It’s
  • Formally incorporate. This means organizing as an LLC, S-corp, or corporation.  You cannot operate as a sole proprietorship or partnership and build business credit properly.  The option you choose should be based upon the level of protection and the tax benefits that you need.  For company credit report purposes, they all work the same.
  • Head over to the D&B website and obtain a totally free D-U-N-S number. A D-U-N-S number is how D&B gets a small business into their system to generate a PAYDEX score. If there is no D-U-N-S number, then there is no record and no PAYDEX score.

Gather the Loyal: Your Company Credit Report Fortress

Usually you have to have credit to get credit.  When building a kingdom, you need your inner circle.  There are always those few that are loyal to your cause before they have any reason to be.  For building a strong company credit report, your inner circle is going to be composed of starter vendors.  These are vendors from the vendor credit tier that will help you out before you even have a business credit score.  They are your jumping off point once your business is fundable.

Terms are, in most cases, Net 30.  This is in contract to the more common revolving credit.  However, they will report your payments to the credit reporting agencies, which is what you need to start building a company credit report.  If you have followed the fundability steps listed above, you will have a credit profile at the credit reporting agencies when these vendors report your accounts.

The vendors sell the things bought all the time in the normal course of business, including marketing materials, shipping boxes, outdoor work wear, ink and toner, and office furniture.

Recruiting for Your Cause in the Vendor Credit Tier

To begin your business credit profile the proper way, you need to get approval for vendor accounts that report to the business credit reporting agencies. Once that’s done, you can make use of the credit.

But not every vendor can help like true starter credit can. It is important to work with those merchants that will grant an approval with marginal effort. You also want them to be reporting to one or more of the big three CRAs: Dun & Bradstreet, Equifax, and Experian.

You may have to apply more than one time to these vendors. Here are some great options to start with: https://www.creditsuite.com/blog/5-vendor-accounts-that-build-your-business-credit/

company credit report Credit Suite2

Uline Shipping Supplies

Uline Shipping Supplies is a true starter vendor. They sell shipping, packing, and industrial supplies, and report to D&B.

You must have a D-U-N-S number. They will request 2 references and a bank reference. The first few orders may need to be paid in advance to initially get approval for Net 30 terms.

Quill

Quill is also a true starter vendor selling office, packaging, and cleaning supplies.  They report to D&B and Experian.

Place an initial order first unless you already have a business credit score with D&B. They require some initial purchases before approving net 30 terms for those that do not already have a score with Dun & Bradstreet.

Generally, they will put you on a 90-day prepayment schedule. If you order items each month for 3 months, they will usually approve you for a Net 30 Account.

Grainger Industrial Supply

Grainger Industrial Supply is another true starter vendor. They sell safety equipment, plumbing supplies, and more.  They report to D&B. You will need to have a business license, EIN, and a D-U-N-S number.

For less than a $1000 credit limit they will approve virtually any person with a business license.

Accounts That Don’t Report

Non-Reporting Trade Accounts can also be helpful. While you do want trade accounts to report to a minimum of one of the credit reporting agencies (CRAs), a trade account which does not report can be of some value.

You can always ask non-reporting accounts for trade references. Also, credit accounts of any sort should help you to better even out business expenses, thus making budgeting simpler. These are providers like PayPal Credit and T-Mobile.

Hit the jackpot with our best webinar and its trustworthy list of seven vendors who can help you build business credit.

Retail Credit Tier

Once there are 5 to 8 or more vendor trade accounts reporting to at least one of the CRAs, then move to the retail credit tier. These are service providers such as Office Depot and Staples.

One example of a company in this tier is Lowe’s. They report to D&B, Equifax, and Business Experian. They want to see a D-U-N-S and a PAYDEX score of 78 or better.

Fleet Credit Tier

Once you have 8 to 10 accounts reporting from the retail credit tier, you can move on to the fleet credit tier. These are businesses such as BP and Conoco. Use this credit to purchase fuel, as well as to repair and maintain vehicles.

Shell is an example of a company in the fleet credit tier. They report to D&B and Business Experian. They want to see a PAYDEX Score of 78 or higher and a 411-business telephone listing.

Shell might claim they want a particular amount of time in business or profits. However, if you already have enough vendor accounts, that won’t be necessary. You can still get an approval.

Cash Credit Tier

When you have enough accounts reporting from all the other tiers, you can start to apply for cards in the cash credit tier.  These are business versions of standard Mastercard, Visa, and American Express cards.  They will come with higher limits and lower rates if you have followed the previous steps and kept up with payments.

Why Is a Strong Company Credit Report Important?

Why build a strong credit kingdom in the first place?  Is it really worth it, especially if you already have solid personal credit? Yes!

Company credit is credit in the business name. It doesn’t connect to a business owner’s consumer credit at all if things are set up properly.  This means a business owner’s business and consumer credit scores can be very different.

Considering that company credit is independent from the individual, it helps to safeguard a small business owner’s personal assets in the event of a court action or business insolvency.

In addition, even if you make payments on time, running business expenses through personal credit can wreak havoc on personal credit scores.  This is because business expenses are typically larger than personal expenses, but personal credit limits are much lower than business credit limits.  As a result, business expenses can keep you close to personal limits consistently.  That means your debt-to-credit ratio goes up, which can make your personal credit score go down.

Hit the jackpot with our best webinar and its trustworthy list of seven vendors who can help you build business credit.

Additional Tips for Building Your Company Credit Report

As you work through this process, here are some things to remember:

  • Make all payments on time. If you do not do this one thing, the rest doesn’t matter.  Bad business credit will not help you, and if you don’t pay on time, that is exactly what you will have.
  • When applying for business credit, use your EIN. You may have to use your SSN for identification purposes, but not for the credit check.
  • Use credit wisely. You do not have to use all you have.  Don’t buy things you don’t need or use so much that you cannot make payments.
  • Make sure your information is updated as needed. If your contact information changes, get that information to the credit agencies.

Once you build a company credit report you can be proud of, you need to keep it that way.  Here’s how.

Stay in the Lookout Tower: Monitor Your Business Credit

Keep an eye on what is happening with your credit. Make certain it is being reported, and deal with any mistakes as soon as you can. We can help you monitor business credit at Experian and D&B for only $24/month. See: www.creditsuite.com/monitoring.

To monitor with D&B go to: www.dandb.com/credit-builder.  For monitoring with Experian, visit: www.smartbusinessreports.com/Landing/1217/.  At Equifax, you can monitor your account at: www.equifax.com/business/business-credit-monitor-small-business.  Experian and Equifax cost about $19.99; D&B ranges from $49.99 to $99.99.

Take Down Enemies Before They Reach the Gate: The Purpose of Company Credit Report Monitoring

What are you looking for? You are looking for mistakes on your report.  Your mission is to take down the enemy and repair any damage done. Errors in your credit report(s) can be corrected, but you have to dispute in a particular way.  Generally, this means you mail a paper letter with copies of any proof of payment with it. These are documents like receipts and cancelled checks. Never send the originals.  Always mail copies.

Itemize any charges you challenge, and make your letter as clear as possible. Be specific about the concerns with your report. Use certified mail so that you will have proof that you mailed in your dispute.

Dispute your business’s Equifax report by following the directions here: www.equifax.com/small-business-faqs/#Dispute-FAQs

You can dispute inaccuracies on your or your company’s Experian report by following the directions here: www.experian.com/small-business/business-credit-information.jsp.

D&B’s PAYDEX Customer Service telephone number is here: www.dandb.com/glossary/paydex.

How Do You Build a Company Credit Report You Can Be Proud Of? Trust the Process

While it isn’t necessarily hard, it is a lengthy and specific process.  Your company credit report doesn’t just appear when you open your first account.  You must have things set up properly to separate your business from yourself.

Then, you must be intentional about finding accounts in the vendor credit tier.  Patience is necessary to build accounts in each credit tier so that you can continue to move through the process. As you do, be certain you do not sabotage yourself by missing payments. Use your credit wisely and you will soon see that you have the credit you need to run a successful business.

Once you have your business credit report where you want it, keep it that way with credit monitoring.  Stay on top of accounts reporting and ensure that your report is accurate and complete.  Then, you will be able to access the funding you need for your business, when you need it.  Your credit kingdom will be a solid fortress than no foe can penetrate.

 

 

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