Tag: Corporate

How Long Does It Take to Establish Corporate Credit? Not as Long as You May Think

Finally! The Answer to “How Long Does It Take to Establish Corporate Credit?”

How long does it take to establish corporate credit?

The quick and dirty answer is, not long.  In fact, in just a few steps you can have a business credit profile ready to receive all your business account information and grow your business credit score.

However, often what people really mean when they ask the question “How long does it take to establish corporate credit?”is “How long does it take to build corporate credit?”  The answer to that question is quite different.  The process for establishing corporate credit initially is multi-step, but it doesn’t take all that long.  In contrast, the process for building corporate credit doesn’t have as many steps, but it can take substantially longer.  That is why it is important to start as soon as possible.

How Long Does It Take to Establish Corporate Credit from the Beginning?

If you start from square one, as your business it getting up and going, it will not take as long to establish corporate credit.  That’s because there won’t be anything to undo. The goal is to make your business appear fundable to lenders as an entity separate from yourself. It can be done at any point.  However, it is much easier and faster if you just start the process in the beginning. What’s the process?

How to Establish Corporate Credit

Establishing small business credit is a process. It is something that has to happen intentionally.  It does not happen passively in the same way personal credit does.  Once you have your business set up the right way however, the whole thing can happen pretty quickly.

You absolutely have to complete the steps in the right order.  Not doing so will result in repeated denials.  No one wants that.

Learn more here and get started toward building business credit attached to your company’s EIN and not your SSN.

How Long Does it Take to Establish Corporate Credit: Set Up Separate Contact Information for Your Business

Your business address, telephone number, fax number, and email address should all be separate from your personal ones.  Ensure your number is from a toll-free exchange and that it has a 411 listing.  You can take care of that here: http://www.listyourself.net.

Take note that your email address should not be through a free service such as Yahoo or Gmail.  Rather, it should have the same URL as your company website.  Can you guess the next point?  You need a professional website with paid hosting through a service such as GoDaddy. These days, if you don’t have a website you may as well not exist.  If you have a bad website, it’s even worse.  Just get it done right from the beginning.

In truth, when it comes to “How long does it take to establish corporate credit?”, the answer is however long it takes to get your website built professionally. The rest of the steps can be completed while that is going on.  Then, when your website is operational, you should have an established file and be ready to start building your business credit score.

How Long Does It Take to Establish Corporate Credit: Incorporate Your Business

The first thing you have to do after you have separate contact information is formally incorporate your business. The reason you need the contact information first is so that you can use it during the incorporation process.

Why incorporate?  If you are organized as a sole proprietorship or partnership, all business transactions are just going to hit your personal credit.  That is because there is no legal separation between you and your business. You are personally liable for all business debts.

You need to organize as a corporation, S-corp, or LLC.  Which one you choose will depend on the level of liability protection you need and how much you want to spend.  Any of them will serve the purpose of separating your business from you for the purpose of establishing business credit.

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How Long Does it Take to Establish Corporate Credit: Get the Digits

Next, there are two important identifying numbers you need to apply for.  The first is an EIN.  This is a number for your business similar to you personal SSN.  You can get one for free through the IRS website.

Next, you will need a D-U-N-S number.  This is also free, and you get it on the Dun & Bradstreet website.  You cannot have a credit file at Dun & Bradstreet without a D-U-N-S number.  Since they are the largest and most commonly used corporate credit reporting agency, you definitely need a D-U-N-S number.

How Long Does it Take to Establish Corporate Credit: Dedicated Bank Account

You also need a dedicated corporate bank account that you use only for business transactions.  This helps separate your business from yourself.  Not only that, it will also help keep business and personal expenses separate for tax purposes.

All of these steps can happen pretty fast.  Incorporation takes a little time, as does building a website. However, if you do it all on the front end you can speed the process along.  If you are taking these steps after your business is already up and running, it could slow things down a bit.

How Long Does It Take to Establish Corporate Credit, or How Long Does It Take to Build Corporate Credit?

The next steps in the process are geared toward building your corporate credit after your credit file is open.  The thing is, you have to get corporate accounts reporting to the corporate credit reporting agencies for your credit score to start building.  This can be tricky, as most lenders consider no credit to be equal to bad credit.  In the beginning of course, you have no credit.

If you do have credit already, but it’s bad, these steps can help improve it.  However, it will take longer. It is always faster to build from zero rather than from a negative number.

How Long Does It Take to Build Corporate Credit? Not as Long as It Would Without the Vendor Credit Tier

First you need to build trade lines that will report payments. This is also referred to as the vendor credit tier. These vendors will extend net 30 terms on invoices without a credit check.  Then they report your payments to the credit reporting agencies. This is how you get initial accounts reporting positive payment history.

Learn more here and get started toward building business credit attached to your company’s EIN and not your SSN.

Not all vendors are in the vendor credit tier.  Of those that are, there are a select few that are easier to get started with.  They can be used as stepping stones to gain more trade lines and thus, build your credit faster.  Here are a few of those easiest to get started with.

Uline

Uline is online at www.uline.com. They sell shipping, packing, and industrial supplies.  They report to D&B.

You have to have a D-U-N-S number. They ask for 2 references and a bank reference. The initial few orders may have to be prepaid to initially get approval for Net 30 terms.

Quill

Quill is another starter vendor. You can find them online at www.quill.com. They sell office, packaging, and cleaning supplies.  They also report to D&B as well as Experian.

Because Quill reports to two separate credit reporting agencies, you get two credit experiences with them. Place an initial order first unless the D&B score is already established.

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

Grainger Industrial Supply

Grainger Industrial Supply is online at www.grainger.com. They sell safety equipment, plumbing supplies, and more.  They report to D&B. You must have a business license, EIN, and a D-U-N-S number.

For under a $1000 credit limit they approve almost anybody with a business license.

How Long Does it Take to Establish Corporate Credit: A Tip for Going Even Faster

One way to speed up the process is to ask vendors that you already work with if they will extend credit and report your payments.  This could even include utilities, rent payments, and telephone companies.  Internet providers are another option.  Since you are already making payments, you could instantly have several accounts reporting positive payment history without taking on any new debt.

Remember they are not required to report payments, but some will if asked.

After you have enough accounts reporting, its time to move on to the next credit tier.

Retail Credit Tier

Once there are 5 to 8 or more vendor trade accounts reporting to at least one of the CRAs, then you can apply for accounts in the retail credit tier. These are service providers which include Office Depot and Staples.

Fleet Credit Tier

Once there are enough accounts reporting from the retail credit tier you can begin to apply for accounts in the fleet credit tier. These are companies such as BP and Conoco. Use this credit to buy fuel, as well as to repair and maintain vehicles.

Cash Credit Tier

The next tier, the cash credit tier, is the goal.  One you have enough accounts reporting from the fleet credit tier, you can move on up to the cash credit tier. These are businesses such as Visa and MasterCard.

When applying for cards in any tier, only use your SSN and date of birth for verification purposes. For credit checks and guarantees, use your EIN instead.

How Long Does It Take to Establish Corporate Credit? Credit Monitoring

Know what is happening with your credit. Make certain it is being reported and take care of any errors as soon as possible. Get in the practice of taking a look at credit reports regularly.

We can help you monitor business credit at Experian and D&B for only $24/month. See: www.creditsuite.com/monitoring.

At D&B you can monitor at: www.dandb.com/credit-builder. At Experian, you can monitor your account at: www.smartbusinessreports.com/Landing/1217/. And 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.

Learn more here and get started toward building business credit attached to your company’s EIN and not your SSN.

Update Your Information

Update your business contact information if you need to so that they have your correct, separate business phone number and address.  Incorrect information will only slow down your business credit efforts. 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.  Equifax updating can be found here: www.equifax.com/business/small-business.

Fix Your Business Credit

Mistakes on your credit report will also slow down the process. You can dispute any inaccuracies in your records. Mistakes in your credit report(s) can be corrected,but the CRAs often want you to dispute in a particular way.

Get your business’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.

How Do You Dispute

Disputing credit report mistakes usually means you mail a paper letter with duplicates of any evidence of payment with it. These are documents like receipts and cancelled checks. Never mail the original copies. Always send copies and retain the originals.

Fixing credit report inaccuracies also means you offer support for any charges you contest. Make your dispute letter as clear as possible. Be specific about the concerns with your report. Use certified mail to have proof that you mailed everything.

Dispute your or your company’s Equifax report by following the instructions 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.

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

So How Long Does It Take to Establish Corporate Credit?

It’s hard to say.  If you are starting from scratch it won’t take as long.  You can get things headed the right way, right away.  You won’t be fighting an already bad score or trying to back track with incorporation and contact information.  Also, you will not be trying to correct mistakes on your report. If you are already up and running, it can take longer, but it still can be a relatively fast process.

Building your corporate credit will take substantially longer than getting the file established.  However, if you work the process the right way and handle the credit you get responsibly as it comes, it will not take as long as you may imagine.  It builds like a snowball and grows bigger, stronger, and faster as time goes on.

 

The post How Long Does It Take to Establish Corporate Credit? Not as Long as You May Think appeared first on Credit Suite.

Colossal Corporate Credit

Your Business Needs Corporate Credit

Corporate credit is credit in a company’s name. It doesn’t tie to an entrepreneur’s personal credit, not even when the owner is a sole proprietor and the sole employee of the business.

Consequently, an entrepreneur’s business and consumer credit scores can be very different.

The Advantages

Because company credit is independent from individual, it helps to protect an entrepreneur’s personal assets, in case of litigation or business bankruptcy.

Also, with two distinct credit scores, a business owner can get two separate cards from the same vendor. This effectively doubles purchasing power.

Another benefit is that even startups can do this. Going to a bank for a business loan can be a recipe for frustration. But building business credit, when done right, is a plan for success.

Consumer credit scores are dependent on payments but also additional considerations like credit usage percentages.

But for corporate credit, the scores actually merely depend on whether a small business pays its debts on a timely basis.

The Process of Building Corporate Credit

Building small business credit is a process, and it does not happen without effort. A company needs to actively work to establish small business credit.

That being said, it can be done easily and quickly, and it is much quicker than establishing individual credit scores.

Merchants are a big aspect of this process.

Undertaking the steps out of sequence 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.

Corporate Credit and Fundability

A small business has to be fundable to lenders and merchants.

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

Plus, business phone and fax numbers ought to have a listing on ListYourself.net.

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

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

Licenses

These licenses all must be in the perfect, correct name of the business. And they need to have the same company address and phone numbers.

So keep in mind, that this means not just state licenses, but potentially also city licenses.

Learn more here and get started toward building business credit attached to your company’s EIN and not your SSN.

Working with the IRS

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

A small business can get started as a sole proprietor. But they will more than likely wish to change to a sort of corporation or an LLC.

This is in order to limit risk. And it will take full advantage of tax benefits.

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

Sole Proprietors Take Note

If you run a small business as a sole proprietor, be sure to incorporate.

If you do not, then your personal name is the same as the business name. Consequently, you can end up being directly responsible for all company financial obligations.

Also, according to the Internal Revenue Service, using this arrangement there is a 1 in 7 possibility of an IRS audit. There is a 1 in 50 chance for corporations! Steer clear of confusion and considerably lower the chances of an Internal Revenue Service audit as well.

Beginning the Corporate Credit Reporting Process

Start at the D&B website and get a totally free D-U-N-S number. A D-U-N-S number is how D&B gets a company in 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.

Once in D&B’s system, search Equifax and Experian’s sites for the company. 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.

In this manner, Experian and Equifax will have activity to report on.

Vendor Credit Tier

First you ought to build trade lines that report. This is also called the vendor credit tier. Then you’ll have an established credit profile, and you’ll get a corporate credit score.

And with an established business credit profile and score you can begin to get 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 to start with, what is trade credit? These trade lines are credit issuers who will give you preliminary credit when you have none now. Terms are typically Net 30, versus revolving.

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

Details

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

To kick off your business credit profile properly, you should get approval for vendor accounts that report to the business credit reporting agencies. Once that’s done, you can then make use of the credit.

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

Credit for Corporations Credit Suite

Vendor Credit Tier – It Makes Sense

Not every vendor can help like true starter credit can. These are merchants that will grant an approval with a minimum of effort. You also want 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 need to apply more than one time to these vendors. So, this is to demonstrate you are trustworthy and will pay punctually. Here are some stellar choices from us: https://www.creditsuite.com/blog/5-vendor-accounts-that-build-your-business-credit/

Accounts That Don’t Report

Non-Reporting Trade Accounts can also be helpful. You do want trade accounts to report to at the very least one of the CRAs. Still, a trade account which does not report can nonetheless be of some worth.

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

Retail Credit Tier

Get 5 to 8 or more vendor trade accounts reporting to at least one of the CRAs. And then progress to the retail credit tier. These are service providers which include Office Depot and Staples.

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

One such example 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 higher.

Fleet Credit Tier

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

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

Shell may claim they want a certain amount of time in business or profits. But if you already have adequate vendor accounts, that won’t be necessary. And you can still get approval.

Learn more here and get started toward building business credit attached to your company’s EIN and not your SSN.

Cash Credit Tier

Have you been responsibly managing the credit you’ve gotten up to this point? Then move onto the cash credit tier. These are companies like Visa and MasterCard. Just use your Social Security Number and date of birth on these applications for verification purposes. For credit checks and guarantees, use your EIN instead.

One such example is the Fuelman MasterCard. They report to D&B and Equifax Business. They need 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 companies such as Walmart and Dell, and also Home Depot, BP, and Racetrac. These are frequently MasterCard credit cards. If you have 14 trade accounts reporting, then these are attainable.

Learn more here and get started toward building business credit attached to your company’s EIN and not your SSN.

Monitor Your Corporate Credit

Know what is happening with your credit. Make sure it is being reported and address any inaccuracies as soon as possible. Get in the practice of taking a look at credit reports. Dig into the particulars, 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 Records

Update the data if there are mistakes or the details is incomplete. At D&B, go here: 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.

Fix Your Corporate Credit

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

Get your business’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 mistakes commonly means you send a paper letter with copies of any proof of payment with it. These are documents like receipts and cancelled checks. Never send the original copies. Always send copies and keep the original copies.

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

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

You can dispute errors 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 phone number is here: www.dandb.com/glossary/paydex.

A Word about Corporate Credit Building

Always use credit smartly! Never borrow more than what you can pay off. Monitor balances and deadlines for repayments. Paying off punctually and fully will do more to increase corporate credit scores than just about anything else.

Establishing company credit pays. Great business credit scores help a business get loans. Your loan provider knows the small business can pay its financial obligations. They recognize the business is for real.

The company’s EIN connects to high scores and loan providers won’t feel the need to require a personal guarantee.

Takeaways

Corporate credit is an asset which can help your company in years to come. We can help you get started toward growing corporate credit.

 

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