Good credit. It’s not just something that we need in our personal lives. It’s also something that is vital to the success of any business as well. So, if you’re someone who happens to run your own company, in order for you to be able to apply for business loans, to get good financing on equipment and furniture and to even pay lower premiums on your insurance, it’s important that you do all that you can in order to establish and build good business credit.
If you’d like some proven examples of how you can do that, here are five:
Get a tax identification number.
If you’re someone who happens to be a sole proprietor, then in order to incorporate your business, one thing that you will need is a tax identification number. That way, your business expenses will be kept separate from your personal ones so that you can start to establish business credit.
Speaking of numbers to apply for, consider applying for a DUNS one as well. It’s a nine-digit number that makes it possible for creditors to gain access to your credit files. You can get a tax identification number by visiting IRS.gov. You can obtain a DUNS number by going to FedGov.DNB.com.
Apply for a business credit card.
If you ask just about any financial advisor about something that you should get in order to build your credit fast, they will recommend that you apply for a business credit card. Not only will it help you to keep your personal and professional expenses separate, but when you pay your balances in full each month, it works in your favor because it helps you to build a good credit score.
Apply for credit from suppliers too.
Speaking of credit, something else that you should do is apply for some lines of credit via your suppliers and vendors as well. You can do this by requesting lines of credit with companies that you plan on doing a lot of business with. Once the line of credit is set, then request flexible payment terms of 60-90 days. If you pay your bills on time, it’s another awesome way to establish solid credit.
Pay your bills on time.
Another thing to keep in mind about business credit is that having good credit is not just about choosing credit cards that you want to use and paying your balances in a timely fashion. It’s also about paying your bills on time.
This is why it’s a good idea to hire a bookkeeper (at least part-time). They can help you keep up with what you owe others and also what you should be getting paid from your customers too. If you’re getting the monies that you are owed, it frees you up to pay your creditors. And when you do that on time, your credit will reflect it.
Monitor your credit score.
Mistakes don’t just happen when it comes to personal credit reports. They also happen with professional ones as well. So, every couple of months, pull all three credit reports from the major credit bureaus (TransUnion, Experian and Equifax) and review them thoroughly.
If you see errors, contact the companies in order to dispute them. For tips on how to properly dispute an error on your credit report, visit consumer.FTC.gov and put “disputing errors on credit reports” in the search field.