If you’re establishing or growing a new business, you may need access to funding before the dollars start rolling in. However, getting approved for credit can be challenging if you don’t already have revenue, investors, or strong personal credit. A little information and the right action steps can help you learn how to build business credit fast. Here are five steps you can take right away:
Get your paperwork in place.
Consider registering your business as an LLC. If you haven’t already, start the process of obtaining an EIN and a DUNS number. Once you get these important steps in place, you’ll be all set up for companies to report your transactions and start building a business credit profile. While this alone likely won’t be enough to open a line of credit, you can’t apply without them.
Open a Business Checking
Set up a business bank account. Not only does this go a long way for tax purposes, seeing your business as a separate entity makes you a significantly more attractive lending prospect. A business checking account can also show an ability to handle money responsibly and creates a positive relationship with the financial institution holding your funds.
Keep a paper trail.
Work with vendors that report to the credit reporting agencies. Many of them offer net-30 or net-60 accounts, which are limited lines of credit that will allow you to defer their invoices for a short amount of time. If you want to build business credit fast, especially if you don’t have a lot of capital, vendor accounts are a great place to start. They’ll report your good behavior to TransUnion, Equifax, Experian, and Dun & Bradstreet.
Set up a phone line in your business’s name.
Setting up a dedicated phone line for your business is an important step that many people overlook. If you’re finding that you’re not getting approved, it may be because your business just doesn’t have enough of a footprint. Make sure the account is set up in your businesses name. As an added bonus, on-time payments for phones and any other utilities will also make you look good.
Clean up your credit report.
While you’re looking to establish business credit, agencies will often go to your personal credit report as a fallback. Make sure that they like what they see by cleaning up any discrepancies on your credit report, making sure that all your bills are paid on time, and by keeping your overall credit utilization low. Betting on a new business can be a risky venture, so it’s wise not to appear overextended when run the numbers.
Establishing business credit takes time, but it’s a worthy long-term pursuit. Be patient and continue monitoring your credit. Applying for funding can help you establish the credit that you need as well as providing revenue to launch or grow your business.