How To Grow Business Credit Fast
Building business credit is an important step for any company looking to establish itself as a trustworthy and credible entity in the eyes of lenders, vendors, and other businesses. Having strong business credit can help you secure loans, negotiate better terms with suppliers, and access other forms of financing. However, building business credit is a process that takes time and effort, and there are no shortcuts to building a solid credit history.
That said, there are several steps you can take to help grow your business credit faster. In this article, we’ll explore some of the best strategies you can use to establish and build your business credit quickly and effectively.
- Incorporate Your Business
Incorporating your business is a crucial step in building business credit. When you incorporate your business, it becomes a separate legal entity, which means it can establish its own credit profile. This means that the credit history of your business is separate from your personal credit history, which can be beneficial if you ever need to secure financing or credit.
- Obtain a Business Tax ID
A Business Tax ID, also known as an Employer Identification Number (EIN), is a unique nine-digit number that the Internal Revenue Service (IRS) assigns to businesses for tax purposes. Obtaining an EIN is easy and free, and it’s a crucial step in building business credit. This number is used to identify your business when you apply for credit, loans, and other financing.
- Open a Business Bank Account
Opening a business bank account is another crucial step in building business credit. When you have a separate business bank account, it helps establish your business as a separate legal entity. It also makes it easier to track business expenses and revenue, which can help you manage your finances more effectively.
- Establish Trade Lines
A trade line is a credit account that is extended to a business by a vendor or supplier. By establishing trade lines with vendors or suppliers, you can build a credit history for your business. Make sure that the vendors or suppliers you work with report your payment history to the credit bureaus. This will help build your business credit faster.
- Apply for a Business Credit Card
Applying for a business credit card is another effective way to build business credit quickly. When you use a business credit card, make sure you make payments on time and keep your balance low. This will show lenders and credit bureaus that you are a responsible borrower and can help boost your credit score.
- Monitor Your Credit Report
Monitoring your business credit report is essential to ensure that your credit history is accurate and up-to-date. You can request a free credit report from each of the major credit bureaus (Experian, Equifax, and TransUnion) once per year. Make sure to review your credit report regularly and dispute any errors or inaccuracies that may appear.
- Pay Bills on Time
Paying bills on time is one of the most critical factors in building business credit. Late payments can have a negative impact on your credit score, so it’s essential to make payments on time to avoid penalties and fees.
8. Apply for Small Business Loans
Applying for small business loans can help you build your credit quickly. By making timely payments on your loans, you can establish a strong payment history, which is a crucial factor in building your credit score. You can also use small business loans to invest in your business, which can help it grow and generate more revenue in the future.
9. Diversify Your Credit
Having a diverse range of credit accounts can help you build your business credit quickly. This means having different types of credit accounts, such as credit cards, loans, and lines of credit. By having a diverse range of credit accounts and making timely payments on them, you can establish a strong credit history and improve your credit score.
10. Use a Credit Monitoring Service
Using a credit monitoring service can help you keep track of your business credit score and monitor your credit report for any changes or errors. These services can alert you to any changes in your credit report, such as new accounts, late payments, or collections, which can help you identify any issues and take action to correct them.
11. Build a Strong Business Plan
Having a strong business plan can help you build your credit quickly. Lenders and credit bureaus want to see that your business has a clear plan for growth and a strong financial future. By having a well-defined business plan, you can demonstrate that your business is a good investment and build trust with lenders and credit bureaus.
12. Stay Organized
Staying organized is essential when building business credit. Make sure to keep accurate records of your expenses and income, and keep track of your credit accounts and payments. This can help you identify any issues or errors on your credit report and take action to correct them.
In conclusion, building business credit is a process that takes time and effort, but by following these steps, you can establish and build your business credit quickly and effectively. Remember to apply for small business loans, diversify your credit, and use a credit monitoring service to stay on top of your credit score and report. By doing so, you can establish your business as a trustworthy and credible entity and access financing and credit when you need it.