How to Build Business Credit without Perfect Personal Credit

You’re not alone if you’re confused about how to build business credit, especially if your personal credit is less than impressive. Many entrepreneurs and business owners don’t understand the main differences between the two. Although your personal and business credit may be related, they are not linked.

In fact, business credit and personal credit reports contain completely different information. The scores aren’t necessarily correlated. However, sole proprietors run the risk of having their personal credit examined by banks and other lenders to determine how they manage debt. This is typically the case when you sign a personal guarantee on a small business loan or open corporate credit lines, since a personal guarantee makes you independently responsible for the debt.

While these two types of credit reports may not always be related, taking the appropriate steps to separate them as your business grows is vital. Statistically, nearly 15% of business owners have poor personal credit, which demonstrates a correlation that may not be as clear-cut as some people think. Because it takes time and patience to build business credit, getting help is often necessary and wise. Tips to Help You Establish Business Credit Fast

If you never plan to take out a loan or tap into a credit line, your corporate credit rating won’t suffer. However, few business owners can get away with funding their company on personal money. Office equipment, lease agreements, vendors, and insurance premiums are often costly expenses. Corporate credit lines are usually unavoidable. The good news is that you can take steps to build business credit despite the condition of your personal rating. Once your business credit is well established, it will be much easier to get funding without putting your personal credit on the chopping block. NOTICE: Avoid becoming the guarantor of your small business loans if possible, as it puts your personal assets at risk. Instead, work with a reputable company to establish business credit fast. Start your business credit building techniques with the following tips and tricks:

· Have your business credit report analyzed by a professional to find any errors or fraud · Incorporate your business · Pay your debts in full · Don’t make any late payments · Purchase seasoned tradelines or credit-ready shelf corporations · Build your personal credit along the way Trusted companies like CorporateCashCredit can get your full credit report analyzed quickly and cost free. Data about your business is gathered from numerous sources and analyzed by credit bureaus using the following information related to your venture:· Your industry · Personnel · Density of employees · Contact information · Estimates sales · Available credit · Credit history · Payment habits · Inquiries · Collections · Tax liens · Judgments · Lawsuits · Bankruptcies · Fraudulent activities Depending on the type of report, the data collected during a credit analysis may also include recommendations from reporting agencies and predictions about the success or failure of your business. A comprehensive analysis by a reputable financial advisor can help ensure the information contained in your business credit report is accurate and up-to-date. · Successfully Incorporating to Build Business Credit Incorporating your business to help build business credit fast is important, but credit bureaus can’t create reports for your company unless they know it exists. To establish your business for the purposes of getting better corporate credit lines, do the following: · Form an LLC (limited liability company) to ensure the entity remains separate from your personal identity. · Apply for an EIN (employer identification number) through the IRS. · Open savings and checking accounts for your business using your legal business name. · Install a phone line dedicated to your business and listed as such. · Register with Duns and Bradstreet for your nine-digit identification number that lists the location of your business and makes it eligible for government contracts and grants. · Remember, Duns & Bradstreet, Experian Business, and EquiFax all create their own credit reports on a business. In addition, some lenders and vendors also use specialty reports to evaluate the creditworthiness of your business.

· Business Credit Building with Tradelines Since lots of different information finds its way to your business credit report, tradelines can make a big difference in what potential lenders and vendors see. Business tradelines are established credit lines of credit between an existing business and a vendor - an office supply company, equipment manufacturer, etc. Properly aged and managed tradelines that are purchased from a reputable company will bode well on your business credit report, making you eligible for financing, loans, and other incentives.

Vendors report the tradeline to the various agencies although they’re not required to. Tradelines that get reported typically include the following information, depending on the type of report that is made: · Available credit · Terms of the account · Recent activity · Payment history (Paydex) Being able to establish business credit fast is nearly impossible without investing in a tradeline. The number of tradelines and the payment history thereof are strong determining factors as to how easy it will be to open corporate credit lines. Since not all vendors report your activity to the agencies, simply paying your vendors early or time may not be enough to build business credit in a timely manner. · How Working on Your Personal Credit Helps Establish Business Credit Refraining from opening too many accounts and paying on time for the accounts you have is important to establishing business credit and keeping your scores above water. However, your personal credit is just as important as your corporate credit lines. While the relationship between personal and business credit has blurry lines, one thing is for certain: they both matter. In general, it’s a good idea to assume that your personal credit affects your business credit. As stated, this is especially true if you are the sole proprietor or a fledgling company. If neither your personal or business credit are where they should be, keeping your venture afloat may be difficult. Seeking the help of a professional may be your best bet.

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