Building Business Credit With Poor Personal Credit
Establishing business credit with poor personal credit requires opening a business bank account and applying for a business credit card. Furthermore, register your company with Experian or Equifax credit reporting agencies, as well as obtain a Dun & Bradstreet DUNS number.
Open a business bank account
Even though opening a business bank account might seem cumbersome, doing so can help establish and build business credit as well as protect your personal assets from the fallout of a failed enterprise. Of course, you must still practice sound money management by paying vendors on time and keeping credit utilization low.
But opening a bank account even with poor personal credit is still possible if you take the appropriate steps. Banks typically run a ChexSystems report before opening business accounts; if your history with ChexSystems is negative, opening may take longer.
As another way to protect both personal and business accounts, when applying for credit cards, lines of credit, and loans you should use your EIN instead of your Social Security number. Nav’s Business Boost product also features tradeline reporting – sending positive payment information directly to major business credit bureaus to increase approval odds.
Apply for a business credit card
A business credit score is essential to running any small business. Lenders use it to evaluate your ability to repay loans, providing access to larger loan amounts and better supplier terms. While personal credit scores are tied directly to an individual’s Social Security number, business scores use an Employer Identification Number (EIN) instead and reflect your company’s financial history.
However, if your personal credit is poor, qualifying for a business credit card may prove more challenging. In this instance, it’s crucial that personal and business finances remain separate in order to avoid further damaging to personal credit history while giving your business its best chance for success. To start building business credit, apply for a card that reports directly to major business credit bureaus while registering your company with Dun & Bradstreet to create an established payment record and establish your DUNS number.
Pay your bills on time
Remarkably, one of the keys to building business credit lies in making timely payments to vendors, suppliers and credit card issuers. Not only will late payments harm your credit score, but timely payments also show lenders that your company is managing its cash effectively and is reliable a partner. Whether using autopay or having set schedule payments make a habit out of paying bills on time!
Even with poor personal credit, you can still build business credit by following these tips. In addition, it is also crucial that you work on improving your personal credit score if any issues exist – this will open more financing options such as vendor trade lines, loans and credit cards for use with day-to-day expenses or business expansion needs. Furthermore, having an impressive business credit profile may qualify you for more favorable lease agreements or better terms from equipment and inventory vendors.
Maintain a positive payment history
One of the key elements to building business credit is having an impressive payment history. This means paying your business credit card and vendor trade lines on time (or even early), showing lenders that your company is trustworthy with its finances and can repay a loan on time.
Monitor your business credit reports regularly so you are aware of any discrepancies or discrepancies that could erode its creditworthiness.
As a business owner, it’s wise to register for a DUNS number – this unique nine-digit identification number helps establish your company with credit reporting agencies and establishes identity with them.
You can find business credit services here.
