Whether you’re a tycoon or running a small corporation, every businessperson comes across the term “business credit.” However, if you have your first business you may find yourself wondering what that term means exactly.
It is essential to build business credit using your EIN rather than your SSN, if possible, so that you can keep your company and personal finances separate. This also helps protect your personal credit score. This is not always possible, so maintaining an excellent personal credit score also becomes important.
Business credit, as the name implies, works similarly to personal credit but is only available to businesses. This credit gives businesses the ability to buy things now and pay later just as you would with a personal line of credit. There are eligibility requirements to get business credit just as there is with personal credit.
Obtaining business credit is essential for businesses. It allows them to grow and scale while keeping personal assets safe. It is essential to build business credit using your EIN rather than your SSN, if possible, so that you can keep your company and personal finances separate. This also helps protect your personal credit score. This is not always possible, so maintaining an excellent personal credit score also becomes important.
The lenders who issue business credit depend on a company’s foundation and revenue to determine how much credit or what limits a business will be approved for. Business credit is beneficial for every business owner as it allows them the opportunity to purchase business essentials or scale their companies without paying immediately. You must have a certain number of tradelines established and be making payments routinely. These are called “payment experiences”. Payment experiences will determine what types of accounts you can qualify for.
Before you proceed with opening any business credit accounts, you will need to set up your business properly. This will help you establish a strong foundation and increase your ability to qualify for business credit. Once you have established your business you will begin working through the tier system to build a strong profile.
By making sure you structure your business properly, file for your EIN and DUNS number, you become eligible for business credit. You build business credit by working through a tier system and repaying the credit spent. Monitor your business credit report to be sure your accounts are reporting properly. Making on time payments and continuing to use your credit accounts will make more credit accessible to your business.
If you’re ready for your business credit consultation, please schedule with us today! We can assist with the entire process or direct your steps through the journey.