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A strong business credit rating greatly affects your brand’s long-term success. Like personal credit, your business credit score affects your ability to secure loans, qualify for favorable interest rates, and establish credibility with suppliers and vendors.
You may struggle to obtain the funding you need to scale and grow your business without a solid credit history. Whether you’re a new entrepreneur or trying to boost your company’s financial standing, read on to discover how to gain better credit.
Formalize Your Business Structure and Obtain an EIN
Formalizing your business structure is the first step in establishing and building your business credit. You must register your company as an LLC or a corporation to establish it as an independent legal entity.
From there, obtain an Employer Identification Number from the IRS. This business tax ID number allows you to open a business bank account, file your business taxes, and apply for credit cards.
Open a Dedicated Business Account
A dedicated business bank account helps you manage your cash flow, separate personal and business finances, ensuring clear financial records. Since credit bureaus and lenders usually evaluate your business’s financial activity, maintaining a business account adds to your credibility.
It also helps you make payments under your business name, track expenses, and build relationships with financial institutions. To open a business bank account, you’ll need your EIN, legal documents, and other information that verifies your business’s identity.
Apply for Business Credit with Dun and Bradstreet
A DUNS number, which you can get from Dun and Bradstreet, is a unique ID that helps build your business’s credit report. DUNS, which stands for data universal numbering system, is needed for tracking and reporting business credit data for your company.
It is also used to establish your business in Dun and Bradstreet’s Paydex score system, which allows lenders to evaluate your payment history. A strong profile boosts your chances of securing loans whether you work as a remote entrepreneur or not.
Establish Tradelines With Vendors
Establishing tradelines is another important way to build your business credit. However, you should only work with suppliers that report to business credit bureaus like Experian, Equifax, and Dun and Bradstreet.
Be sure to assess the tradeline supply company review before committing your money. Paying invoices on time and building a strong credit profile make qualifying for loans and favorable financing terms easier. A solid vendor will also strengthen your business’s financial credibility.
Obtain and Use Your Business Credit Card Responsibly
Opening a business credit card is an effective way to build business credit. However, choose a card company that reports to business credit bureaus with your EIN. To enjoy the full benefits, use the card regularly while maintaining a low credit utilization, below 30% of your limit.
Another way to maximize credit cards is to make timely payments, avoid interest, and maintain a strong payment history. Responsible use will strengthen your credit profile, improving your eligibility for better loan terms and higher credit limits.
Endnote
You must establish and build solid credit when aiming for long-term business success. To do this, formalize your business structure, obtain an EIN, open a dedicated business account, and apply for business credit. Also, establish tradelines with vendors and use your business credit card responsibly.
