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Building business credit is an important step in establishing the financial stability and credibility of your business. It can help you secure loans, lines of credit, and other financial products that can help your business grow and thrive. Here is a step-by-step guide on how to build business credit:
1. Incorporate your business: Incorporating your business as a limited liability company (LLC) or corporation can help you establish a separate legal identity from your personal credit, which can make it easier to build business credit.
2. File the business entity, LLC, S-corp, C-corp, etc. (I use incfile.com because it is free. Legal zoom will do this for you as well but not free.)
3. Obtain a Federal Employer Identification Number (EIN): An EIN is a unique nine-digit identification number assigned to your business by the IRS. You can use your EIN to open business bank accounts, apply for credit, and file taxes. (Can be done on the IRS website)
4. Create a business phone number and address ( I use anytimemailbox.com)
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- Use a local phone number
- Don’t use PO Box
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5. Open a business bank account: Opening a business bank account can help you establish a financial history for your business. Make sure to use your EIN when opening the account to help build your business credit.
6. Get listed and become bank compliant
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- use list yourself and 44.info
- create yelp profile (get 3 to 5 reviews)
- yp.com
7. Know your SBSS score
In most cases, the SBA won’t approve loan applications for businesses unless their SBSS score is 160 or more.
175 is a good score for a Small business loan
185 – 198 for No doc loans (no tax returns and no bank statements)
Scores range from 0 to 300
8. Set up business credit accounts: Start building your business credit by setting up credit accounts with vendors and suppliers that report to business credit bureaus. You can also apply for a business credit card, which can help you establish a credit history for your business.
9. Monitor your business credit: Make sure to regularly check your business credit report to ensure that all of your credit accounts are being accurately reported. If you find any errors, dispute them with the credit bureau as soon as possible.
10. Pay your bills on time: Payment history is one of the most important factors in building business credit, so make sure to pay all of your bills on time. Late payments can significantly damage your credit score.
By following these steps, you can effectively build business credit for your company, which can help you secure the financial resources you need to grow and succeed.
Important Links:
Incfile – Free LLC Filing + State Fee
Anytimemailbox – Virtual Mailbox
Opus – Opus Virtual Offices
Regus – Regus Virtual Offices
Listyourself.net – Get listed in Directory Assistance for free!
411.info – Get listed in 411 in under 24 hrs
