Build Business Credit Fast With These Tips
In many ways, getting a business loan is very similar to a lot of other kinds of loans. Based on your credit, you may be offered different kinds of opportunities such as larger loans or lines of credit, lower interest rates and more. However, starting out, your new business probably doesn’t have any credit established yet. Although some lenders will still provide loans by looking at your personal credit and also by charging higher interest rates and taking more collateral, the best bet is to increase your business credit score.
The first step to do is to make sure that your business has a federal tax ID number. This will allow your company to be its own thing financially separate from you. From there, your business will file its own tax information as well as start securing its own credit line. You will also use that new tax ID number to register with specific credit bureaus that deal with businesses instead of personal credit.
The next step is to get everything up to date, including your corporate records, state filing and licenses. You can then start applying for business credit, starting to credit from suppliers of the parts that you need to create your product. Many suppliers will extend credit lines to their newer customers so that you can get going without spending all of your start-up cash. Not only can this help your company get a foot in the door, but it is the first big step toward getting a great credit score to use for later ventures.
From there, it is very similar to building good credit for personal use. Simply use the lines of credit when you can to buy supplies that you may need, and pay the invoices on time or early. Although it will probably take some time to build up a good enough history to start seeing a significant difference, be sure that you are keeping track of your score so that you know if anything changes. This can help you catch something early if there is a problem, and it will also show you what is working in your plan.
Getting a stronger business credit score means that you can stop using your personal credit for businesses purposes. This is the ideal situation, because then your personal and business lives won’t be entangled in each other as much anymore. Be sure that you get started on building your credit and consider talking to a business financial advisor for help today.