Read Aloud the Text Content

This audio was created by Woord's Text to Speech service by content creators from all around the world.

Text Content or SSML code:

10 Steps to Build Credit for Your Business Fast How to build business credit has been broken down into ten steps. The first four steps will help you discover who you are as a business. Then, if you still need to set up an LLC, this is where you'll start. Finally, the last six steps will help you build credit for your business and raise your credit score. You might have gone through some of the steps already. If so, skip to the appropriate step, and take action. Step 1. Create an LLC. When you set up a business entity like an LLC or corporation, you create a business credit profile separate from your credit. This is because most lenders and banks won't lend money to a business until it has been set up as a legal entity. A limited liability company (LLC) is also an excellent way to protect your home, car, and personal bank accounts in case your business gets sued or can't pay a debt. Creating an LLC is the easiest and least expensive way to start a legal business. Steps to creating an LLC 1. Decide on a Business Name 2. Designate a Registered Agent 3. Get a Copy of Your State's LLC Article of Organization Form 4. Prepare the LLC Article of Organization Form 5. File the Articles of Organization 6. Create an Operating Agreement 7. Keep Your LLC Active Step 2. Get an EIN An Employer Identification Number, or EIN, is like a business's Social Security number. An EIN is linked to your business credit profiles, like your Social Security number is linked to your credit profiles. To file taxes, open a bank account, or apply for business credit, you need an EIN. Click Here to Apply for your EIN: https://www.irs.gov/businesses/small-businesses-self-employed/apply-for-an-employer-identification-number-ein-online Step 3. Get a Business Website When you have a website for your business, it's easy for lenders to find out about your business's credit, which can help them decide whether or not to give your business a loan. Conversely, if you don't have a good website for your business, it's a red flag for lenders. The better your business website is, the more professional it looks and the easier it is to use. Lenders want to know about your company. So, your website should show what your business does, who your customers are, where it's located, and what products and services you offer and give a visual overview of your business. Step 4. Get a Business Phone System Customers and financial institutions will think more highly of your business if you have a business phone system just for it. In addition, lenders do background checks to see if you meet specific business credit criteria. One of these criteria is having a phone number for your business listed in online directories, on your website, on social media platforms, etc. What kind of business you have will determine the best type of business phone line. For instance, consider getting a VoIP service if you run a small business. This would let you set up a virtual office number that customers could call directly without dialing long-distance numbers. Step 5. Open a bank account for your business With a business bank account, you can keep your money separate from your business money. This is important if you want to keep your limited liability and build a business credit file separate from your personal credit history. Lenders, banks, and other creditors often look at the bank accounts of businesses to see if they are eligible for loans and other forms of credit. Having a business bank account also makes it easy for lenders to figure out how much your business is worth and, based on how you've spent in the past, how likely your business will be able to pay back the loan. Having the correct bank account for your business is very important. You want one with good terms, a lot of flexibility, and long-term help for your business. Tip: Ensure your EIN and Articles of Organization are on hand when applying for a business bank account. Step 6. Get a credit card for your business How much credit you can get depends on how long you've been in business and how much money you make every month. It also affects whether you get a secured business credit card or an unsecured business credit card. With a secured business credit card, you have to put down a deposit equal to the amount you can spend each month. A business credit card that doesn't need a deposit and has a limit set by the lender or issuing bank is called an "unsecured" card. If you make regular payments on time and spend less than half of your credit card limit, your credit limit will increase over time. So, you can build business credit quickly by making regular, on-time (or even early) payments and using credit wisely to move your business forward. The major business credit reporting agencies will reward you for having these higher business credit lines. When starting a business, you won't be able to get a credit card that doesn't require a deposit. Instead, new businesses will need to get a secured credit card to build their business credit. Secured cards only let you borrow your money, but the business credit bureaus get an excellent monthly report when you pay on time. Step 7. Set up Net 30 accounts for your vendors. With a Net 30 account, you can order goods from a vendor. The vendor will send you an invoice for your order, and you have 30 days from the date of the invoice to pay it. Most vendors who offer net 30 payments tell the major business credit bureaus about these payments. This helps you build your business credit by adding trade lines to your business credit profiles. And if you pay on time, you'll be helping your business credit score. The more points you have, the easier it will be to get a business loan. It is best to have at least five vendors with a net of 30 terms who report to business credit bureaus. For example, you can start with Office Garner because they report to multiple business credit bureaus like Dun & Bradstreet and Equifax. Note: When applying for your net 30 accounts, ensure you have your EIN and Articles of Organization. Step 8. Sign up for credit cards in stores You can buy things at stores you often visit with an in-store credit card. These cards work like regular credit cards, but you can only buy things at the stores where you have a card. In-store credit cards are like secured business cards because they are easier to get than unsecured credit cards. This makes them a good way for small businesses to build credit. In addition, your business's credit score will go up because of this better credit history, which the major credit reporting agencies will reflect. Tip: Be smart when looking for a credit card in a store. You should apply at stores where you do business often, like office supply stores and other big-box department stores where you buy things for your business. Step 9. Ask for Higher Net-30 Credit Lines Your credit utilization score is the ratio of your net 30 account balance to the most you can borrow from your credit line. Lenders like to see a low ratio of the amount owed to the amount of credit available. So your credit utilization score is better if your limit is high and your balance is low. And your business credit score goes up as your credit utilization rate decreases. This will give you more credit options and better terms when you borrow money. Ask the net 30 vendors you already do business with to raise your credit limits with them. If you've paid your Net 30 bills on time for at least six months, you should be approved for higher credit lines. This will also help the credit report for your business. Step 10. Ask for a loan for your business You can get more significant amounts of money through business loans. Business owners use the money to grow their businesses quickly. Building business credit aims to get loans for your business with the best terms. Following the steps above and making payments on time, you've set yourself up to be approved for the best business loans.