How to Establish Business Credit

The first step in learning how to establish business credit is to obtain an (EIN) Employer Identification Number. This number is issued by the IRS, it identifies your business as being legal, and it also gives your business credibility. Obtain all licenses and permits before operating a business.

Check with state and local taxing agencies for additional information if needed. Another step to take in establishing business credit is to open a business account. Every business should have a bank account that is separate from a personal account. This is an account where deposits, and other business transactions will be conducted. This account should be used solely, for business purposes.

Another step that is necessary in establishing business credit is to obtain two, or three business credit cards. Sometimes one card might be enough, depending on how much of a credit limit is needed. Credit cards are great credit builders, providing that the payments are made on time.

Receiving a positive and a high rating for a new business are very important. When applying for a loan, a line of credit, or a credit increase, lenders/creditors will undoubtedly, pull the business credit report.

It's recommended that businesses obtain a Dun and Bradstreet number. This is a unique nine digit number that is used to track a business physical location. This number is also used by creditors to obtain credit reports, legal status, and funding disbursements of the business in question.

Nearly all government vendors should have a d-u-n-s number, also known as a Data Universal Numbering System. Businesses that do not have a Duns and Bradstreet number will not be given serious consideration, in obtaining a government contract. This is a requirement for businesses wishing to apply for grants, or bid on government jobs.

Another important step to remember when learning how to establish business credit, is to build relationships. Establishing good communication, and people skills help to build a lasting relationship with vendors . Many vendors will extend credit to those they personally know, or have some type of relationship with. It is important to network, and hand out business cards when appropriate.

One other important rule to remember in establishing business credit, is to seek creditors that will report payment history, to the three major credit bureaus. Building a business profile, or portfolio is extremely important. Never use business funds for personal needs, unless it is business related. If in doubt check it out.