Building Business Credit In 2020
How Does Business Credit Work?
Building business credit in general I believe is one of the most sought after yet overlooked topics when it comes to building your business. I personally believe it is overlooked because it just sounds scary, “Business Credit”. The reason I believe it sounds soo scary is that people compare it to personal credit and let’s be honest most of you reading this still haven’t figured out fully how to manage your own personal credit. I’m here to tell it’s actually not as complicated as it seems, and there’s a lot of benefits when building business credit. In this article, I’m going to go over a few key points and jumpstarting your business credit journey.
Do I Qualify For Business Credit?
Just like any other loan type product, there are some minimum requirements required on your behalf in order for you and your business to be eligible for a business line of credit. One of the requirements need to obtain a business line of credit is having your personal credit history in good standing, to lenders, this is an indicator that you’ve always been on time with your payments with past tradelines and that you’ve demonstrated consistency. If your personal credit is not in good standing then obtaining a business line of credit for your new business will be very difficult.
You Must Get An EIN Number
Your EIN number or Tax ID number is basically your Social Security number but for your business, it is literally its own entity. This way you don’t have to use your own personal SSN which looks unprofessional to lenders and helps mitigate any personal guarantees. The last thing you want to do is have your personal credit and business credit all mixed up, to apply for an EIN you can obtain one from the IRS.
Open A Business Bank Account
When it comes to business funding a business bank account is required for all business loan type products, in addition to this, it will help you keep track of your business finances and keep them separate from your personal finances and tax purposes. Also, most lenders are required to see your business bank account in good standing and consistently with a positive balance. If you do not have a business bank account in place and need help opening one you can open one online here.
Get A Dun & Bradstreet D-U-N-S Number
This is a process that most entrepreneurs either look over or don’t even know it exists, and this number alone can help take your business’s finances to the next level. The Dun & Bradstreet D‑U‑N‑S Number is a unique nine-digit identifier for businesses. This number is assigned once their identity process has confirmed and identifies a company as being unique from any other in the Dun & Bradstreet Data Cloud. The D‑U‑N‑S Number is used as the starting point for any company’s Live Business Identity. To create your D-U-N-S Number go to https://www.dnb.com/duns-number.html