Establishing Business Credit

I plan on starting my own business in about 5-7 years (HVAC/Electrical Service and Installation). However, I was wondering if it would be a good idea to create the company name and establish the LLC sooner, so I can get a head start on establishing business credit. Or should I wait?

I'm 23 years. My credit score is 750. I have 2 major credit cards, and no debt. My credit history spans nearly 3 years. I've never taken out a loan or financed a large purchase.

If I start out now, will my business credit score be zero? Or is my credit score a factor as well? Would it be like co-signing for myself?

Any help would be greatly appreciated.

Thanks

Edited: 06/26/2010 at 06:15AM

Mike K

· Florida

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Nov 02 '08, 08:53 AM

When banks lend they do look at how long you have been in business, so if you did it now you could say you have been in business for 5-7 years, the only problem is you wont have tax returns for that time.
Also your business and personal scores are separate, both will be factors when getting a loan from a bank. if you go to creditboards.com they have a business credit section that is pretty informative.

Edited: 06/26/2010 at 06:17AM

Scott Williams

Residential Real Estate Agent · Northern, Wisconsin

85 posts
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Nov 15 '08, 03:34 AM

Having an older business would be great, but there will be costs associated with keeping it open and not using it.

Alot can change in five years..also your personal credit will be very important when you start looking for business credit.

You could just work on your personal credit, do some reading and get some more lines showing on your report. And more available credit.

There are also some nice quasi business cards available..they look at your personal credit to decide what to give you but do not report to your personal credit reports.

Chase professional and Barclay's Bank Atlantic are a couple of good examples.

Like Mike said go to creditboards.com..its a great site and has helped me a ton.

Edited: 06/26/2010 at 06:23AM

Marc Augustine

· Alabama

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May 06 '09, 04:04 AM

you should start now
building business credit takes time
and it will be a good idea to get started early
all reveolving cash offered to businesses are only offered to businesses that are 2 years and older now

Edited: 06/26/2010 at 08:09AM

Frank White

Real Estate Investor · Chicago, Illinois

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May 06 '09, 03:45 PM

you sure you couldn't help him with a couple of business references Marc?

Edited: 06/26/2010 at 08:09AM

Aiman Zul

9 posts
50 influence

May 04 '10, 10:50 PM

Originally posted by Aegis Forex

Hi,

I plan on starting my own business in about 5-7 years (HVAC/Electrical Service and Installation). However, I was wondering if it would be a good idea to create the company name and establish the LLC sooner, so I can get a head start on establishing business credit. Or should I wait?

I'm 23 years. My credit score is 750. I have 2 major credit cards, and no debt. My credit history spans nearly 3 years. I've never taken out a loan or financed a large purchase.

If I start out now, will my business credit score be zero? Or is my credit score a factor as well? Would it be like co-signing for myself?

Any help would be greatly appreciated.

Thanks

First open a c-corp not an LLC. C-corp is the best structure for business credit. For one it will keep your personal credit out of it (as it should be) IF you have all else in place. I am sure you will get a separate land line phone under your business name, and take care of the rest of the basic stuff ( a business account etc)

. Establishing business credit does not have to take a long time.

Aimanzul

Edited: 06/26/2010 at 12:43PM

Armand R.

Real Estate Investor · La Jolla, California

16 posts
50 influence

Aug 19 '10, 04:13 AM

Marc

Can one build biz credit using a virtual office address?

We have several NV c-corps and LLCs that we've been warehousing since 2005, and now that NV requires paying for the biz license to renew the annual list, we want to start building credit to them, but keep the credit profile separate from our other businesses profile and physical office address -- hence considering using a virtual office address.

Will D&B accept a virtual office address, and a virtual phone that's listed with a national 800 yellow pages?

Or will the virtual address/shared office, prevent a 80 paydex score being achieved?

Thanks!