How to build business credit

11 Replies

I know that DnB has something to do with business credit, however, when I called them to ask how I was doing on my business credit, they said they had no records, and it will cost me a thousand dollars to start the process of me building up one. What?! Are they for real? Need help on how my company could apply for pure company credits. I would like my personal and company to be separate, I don't like to sign joint and several liability whenever i sign up for something. Any ideas?

@Manolo D.  

 Have you tried doing a search on BP for this? I know it's been discussed in the past. Start opening accounts with suppliers, etc. to begin establishing credit for your company, the same as personal credit. 

The fastest way to build business credit today is to bypass vendor credit and go directly to the banks-- unsecured business lines of credit. In 90 days business owners can obtain $100k to $250k in unsecured business lines of credit themselves. 

Follow these simple steps:

1) Establish a strong internet presence for your company by listing it on at least 15 sites-- Facebook, LinkedIn, Twitter, Scoop It, Bing, Manta, 411, Google+, Google Places, etc.

2)  Purchase a certificate of deposit and borrow against it (now you have a secured loan ).

3) Make regular deposits into your business checking account for 90 days to establish a favorable bank rating.

4) Add higher level trade references to Dun and Bradstreet to provide depth to your Paydex Score (net 30s are usually lower amounts; you'll need higher approvals from your trade references-- 2k to 4k).

5) Upload your company financials to Dun and Bradstreet to complete your file and create a strong credit profile.

6) After 90 days apply for unsecured lines of credit. Here is why you'll be approved:

* a bank has already loaned your business money (secured loan); Dun and Bradstreet, Experian Business and Equifax Business have all reported your loan(s). The secret is to pay back and repeat the secured loan at least 3 times in the 90 day period.

* the added trade references will add credit profile depth, as will uploading your financials

* your deposit activity and use of bank products (cd) shows ability to repay

* bank rating is formed after 90 days of deposit activity 

Originally posted by @Karen Margrave :

@Manolo D. 

 Have you tried doing a search on BP for this? I know it's been discussed in the past. Start opening accounts with suppliers, etc. to begin establishing credit for your company, the same as personal credit. 

 @Karen Margrave

Yes I have a few pages looked at before posting, so far 2-5 posts aren't enough information. Most of the information I read is more or less mixed business credit with personal. We have accounts with wholesalers in SoCal, CED Electrical, Walters Elec, Hirsch Plumbing, Ganahl Lumber, Shaw, Big D and some other small companies. However, I am not sure about if those companies are reporting on the 3 BBs like Experian etc. We have a business credit card from the bank, which I cant really use much as they say the business is new, risks and etc. I've been maxing it out 2-3 times a month and paying it in off every time its 80% - didn't matter if they billed me or not - and it is getting annoying and time consuming. for most transactions, i do checks since I wanted paper trail and supplier invoices attached. I have searched Experian and Equifax, I could find the company, and will probably set them up tomorrow and see if I could find some info before buying the credit score. The heavy price for DnB might be useful if I had something to start with.

Originally posted by @Stanley Whigham :

The fastest way to build business credit today is to bypass vendor credit and go directly to the banks-- unsecured business lines of credit. In 90 days business owners can obtain $100k to $250k in unsecured business lines of credit themselves. 

Follow these simple steps:

1) Establish a strong internet presence for your company by listing it on at least 15 sites-- Facebook, LinkedIn, Twitter, Scoop It, Bing, Manta, 411, Google+, Google Places, etc.

2)  Purchase a certificate of deposit and borrow against it (now you have a secured loan ).

3) Make regular deposits into your business checking account for 90 days to establish a favorable bank rating.

4) Add higher level trade references to Dun and Bradstreet to provide depth to your Paydex Score (net 30s are usually lower amounts; you'll need higher approvals from your trade references-- 2k to 4k).

5) Upload your company financials to Dun and Bradstreet to complete your file and create a strong credit profile.

6) After 90 days apply for unsecured lines of credit. Here is why you'll be approved:

* a bank has already loaned your business money (secured loan); Dun and Bradstreet, Experian Business and Equifax Business have all reported your loan(s). The secret is to pay back and repeat the secured loan at least 3 times in the 90 day period.

* the added trade references will add credit profile depth, as will uploading your financials

* your deposit activity and use of bank products (cd) shows ability to repay

* bank rating is formed after 90 days of deposit activity 

Holy cow! My golden ticket! Thank you very much!

I have a few questions:

2) Did you say purchase a CD and pay it in full 3 times within 90 days? How much will the CD be?

3) How large does a regular deposit need to be?

4) Higher approvals means? How many trade references do I need to upload? I work with about 3-5 supplier regularly. Are those trade references or my commercial clients will help too?

Thank you very much again.

@Manolo D.     

1. CD should be at least $1,000. Goal is to pay off in 3 weeks (place proceeds from cd loan in another account and make a couple payments, then pay off the loan; do this 3 times, each time requesting a higher loan amount).

2. Deposits vary when doing business; goal is to reach a combined monthly deposit total (in all linked accounts) of $10,000. This may sound like a lot, but daily deposits of $300 plus throughout the month will easily add to this.

3. You need to add at least 3 trade references to get a paydex score. Use suppliers who have given you the highest credit approvals over a 12 month period.

@Manolo D.    To build  and learn business credit, go to www.creditboards.com and go to business credit forum.  It is a great community just like BP, with much information and many helpful members.   

Originally posted by @Stanley Whigham :

@Manolo D.     

1. CD should be at least $1,000. Goal is to pay off in 3 weeks (place proceeds from cd loan in another account and make a couple payments, then pay off the loan; do this 3 times, each time requesting a higher loan amount).

2. Deposits vary when doing business; goal is to reach a combined monthly deposit total (in all linked accounts) of $10,000. This may sound like a lot, but daily deposits of $300 plus throughout the month will easily add to this.

3. You need to add at least 3 trade references to get a paydex score. Use suppliers who have given you the highest credit approvals over a 12 month period.

 Yes! I am now half tooled for this journey, tomorrow, I will be visiting the bank so I could start on the process. For sure I will be back during the unsecured loan phase. I am using bank of america, so i might need another bank to approve me on that unsecured loan. Thank you very much for the information.

Originally posted by @Joe Moore :

@Manolo D.   To build  and learn business credit, go to www.creditboards.com and go to business credit forum.  It is a great community just like BP, with much information and many helpful members.   

 Hi Joe, yes I have read about the site from a different thread, I need a little bit more research on the terms, they are too technical for me, I spent 20 mins going back and forth the site and google. for now, i plan to go to the bank and see if they could help me raise funds.

  1. Incorporate your business. Even though you may be incorporated when you're reading this, it deserves a mention. With sole proprietorships and general partnerships, the business is legally the same as the owner; therefore, there can be no separation of business credit history from personal. Incorporating a business or forming an LLC creates a business that is legally separate from the owner(s).
  2. Obtain a federal tax identification number (EIN). The EIN is basically a social security number for a business. It is required on federal tax filings, and is also required to open a business bank account in the name of the corporation or LLC. In order to comply with IRS requirements, many larger businesses also require an EIN from their vendors in order to pay them for services provided.
  3. Open a business bank account. Open a business checking account in the legal business name. Once open, be sure to pay the financial transactions of the business from that account. If you use a business credit card (see below) for many financial transactions, be sure to pay the credit card bill from your business checking account.
  4. Establish a business phone number. Whether you use a land-line, cell phone or you use VoIP, have a separate number for your business and in your business’s legal name. List that number in the directory so it can be found.
  5. Open a business credit file. Open a business credit file with all three business reporting agencies.
  6. Obtain business credit card(s). Obtain at least one business credit card that is not linked to you or any other owners personally. Pick a business credit card from a company that reports to the credit reporting agencies.
  7. Establish a line of credit with vendors or suppliers. Work with at least five vendors and/or suppliers to create credit for your company to use when purchasing with them. Ask them to report your payment history to the credit reporting agencies.
  8. Pay your bills on time. Perhaps it should go unsaid, but be sure to pay your bills on time. Like with your personal credit, late payments will negatively impact your business credit.

Having good business credit can provide a number of benefits, including:

  • Positioning your company for more favorable payment terms with new vendors and suppliers.
  • Reducing the number of times you will need to prepay for products or services purchased.
  • Allowing you to obtain better interest rates and credit terms from lenders and banks.

Once you have established and built good business credit, be sure to monitor and protect it, just as you do with your personal credit.

Originally posted by @Mary Johnson :

  1. Incorporate your business. Even though you may be incorporated when you're reading this, it deserves a mention. With sole proprietorships and general partnerships, the business is legally the same as the owner; therefore, there can be no separation of business credit history from personal. Incorporating a business or forming an LLC creates a business that is legally separate from the owner(s).
  2. Obtain a federal tax identification number (EIN). The EIN is basically a social security number for a business. It is required on federal tax filings, and is also required to open a business bank account in the name of the corporation or LLC. In order to comply with IRS requirements, many larger businesses also require an EIN from their vendors in order to pay them for services provided.
  3. Open a business bank account. Open a business checking account in the legal business name. Once open, be sure to pay the financial transactions of the business from that account. If you use a business credit card (see below) for many financial transactions, be sure to pay the credit card bill from your business checking account.
  4. Establish a business phone number. Whether you use a land-line, cell phone or you use VoIP, have a separate number for your business and in your business’s legal name. List that number in the directory so it can be found.
  5. Open a business credit file. Open a business credit file with all three business reporting agencies.
  6. Obtain business credit card(s). Obtain at least one business credit card that is not linked to you or any other owners personally. Pick a business credit card from a company that reports to the credit reporting agencies.
  7. Establish a line of credit with vendors or suppliers. Work with at least five vendors and/or suppliers to create credit for your company to use when purchasing with them. Ask them to report your payment history to the credit reporting agencies.
  8. Pay your bills on time. Perhaps it should go unsaid, but be sure to pay your bills on time. Like with your personal credit, late payments will negatively impact your business credit.

Having good business credit can provide a number of benefits, including:

  • Positioning your company for more favorable payment terms with new vendors and suppliers.
  • Reducing the number of times you will need to prepay for products or services purchased.
  • Allowing you to obtain better interest rates and credit terms from lenders and banks.

Once you have established and built good business credit, be sure to monitor and protect it, just as you do with your personal credit.

 Thanks, I have all these going already, but like I mentioned, when I called DnB, they said I was at minimal score and that of I have a score that is equal to an 18 year old's fico score.

@Manolo D. 

Here are the most effective ways to create a strong Dun and Bradstreet business credit profile:

• Submit financials (balance sheet and income statement) to Dun and

Bradstreet

• Purchase Dun and Bradstreet Credit Builder—to add 4 high limit

trade references (about $84 per month-- only until profile gets strong)

• Pursue minimum BB1 Business Credit Rating with Dun and Bradstreet (any lower limits access to higher unsecured lines of credit)

• Register in the System for Awards Management (SAM) for future gov.

contracts

• Optimize company’s business bank rating--need at least “low 5” bank

rating.

• These and other actions will allow you to qualify for high-limit Equifax Business /

Experian Business / Dun and Bradstreet tradelines

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here