Building business credit requires attention to detail just as having good personal credit scores does.
There are four components to building business that all must be done in order to optimize business credit scores.
Business Credit Component #1 - Open Business Credit Files. You will need to make sure that your business has open and correct business credit files with all three major business credit reporting agencies. Those agencies are Experian Business, Dun & Bradstreet, and Equifax Business. It is important that you build business credit under an entity, such as a corporation or LLC, and that your business entity is listed by its exact business legal name as filed with your Secretary of State.
Business Credit Component #2 - One Bank or Installment Account. This is called comparable credit. Lenders are going to want to see that your business has been given a sizeable business loan and have handled it properly. This can be a secured bank loan where you take out a CD at your bank and use it to secure a business loan. An equipment or vehicle lease works well for this too. There are other types of commercial loans that will work here too. However, you have to make sure that the loan is reporting to the business credit agencies.
Business Credit Component #3 - Three Business Credit Cards. There are hundreds of business credit cards out there. Most large banks offer business credit cards as doing many large retailers. So you can go into Wells Fargo, Chase, Bank of America, Citibank and apply for a business credit card or do the same at Staples, Lowes, or Home Depot. Be careful, some of these do not report on your business credit they report on you personally or they only report if you are late or default. After you take the business finance pre-qualification test, we let you know which business credit cards report and to which agencies.
Business Credit Component #4 - Five Vendor Lines of Credit. 97% of all business lending in the United States is one business lending to another business on pre-arranged terms. Those terms are typically "Net 30", meaning you get goods or services and you have 30 days to pay the invoice. There are thousands of businesses extending Vendor Lines of Credit. However only a small select few report to the business credit agencies. For example, it is estimated that there are as many as 500,000 businesses in the United States that are extending credit terms; while it is estimated that the business credit agencies are getting reporting from less than 1% or 5,000 of those. After you take the business finance pre-qualification test, we let you know which vendor credit lines report and to which agencies.