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Dream Tank USA Business Mastery Course

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  • ceoccp7
  • John
  • dreamtankusa
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  • jacob
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Advanced Building Business Credit

You have worked all your life towards a specific goal and now that the time has come to accomplish it, you realize that you have no credit history to help you get there. For example, if you’re planning to start your own business, a poor credit score will not only deter you from accomplishing your desires but will also affect your financial reputation in the process. The lack of company credit negatively reflects on one’s personal business credit rating too.

Businesses, like individuals, can have credit reports and ratings. Experian, Equifax, and Dun & Bradstreet are just a few of the commercial credit agencies that maintain track of debt payments and other credit information.

Lenders, creditors, suppliers, insurance firms, and other organizations may utilize your business credit record when analyzing a credit or insurance application or a business contract.

These pointers on how to develop company credit and subsequently build a business credit profile might assist you in realizing your goals.

Building a Business Credit:

You probably know that building your personal credit score is important for things like applying for a mortgage or car loan. And, you may have even heard about your business credit score, which is used to help businesses get the financing they need for their operations. As a result, it’s important to understand what a business credit score is, why you should build one and how you can start building it.

 

Here some tips that could you build your Business Credit:

  • Show your Business to the public – Just because you’re open for business (or soon to open) doesn’t imply you’ve put yourself on the map. You can’t create credit efficiently until you’ve established your company! Obtain a company phone number and have it listed in a directory assistance directory. Unless you have a personal credit history established, doing business with others is essential to obtaining credit. Having a business phone number is a must because it’s more likely for potential creditors to call that number than your home phone line. It also makes it easier for people like wholesalers and suppliers to contact you for business. In addition, having your business listed with local and national directories (such as the yellow pages), provides potential customers with an easy way to find you instead of having to drive throughout town to find you.
  •  Establish vendor credit – As a business expands and becomes successful, it must secure more credit for payments. For example, a company can contact an industry-relevant vendor or supplier. The company may want to represent its name in the industry as a leader in its field. By securing good credits with the major source of supplies and components, the business can make a good impression on its clients. The business should use credit services within the business code of conduct to avoid any complicated situations with their financial manager.
  • Get an EIN – An EIN is a tax ID number your business will need in order to complete IRS tax filings. If you’re thinking “wait, I don’t have any taxes to file”, keep reading–you might need this for non-tax reasons. Based on the type of business entity you set up, an EIN is required: sole proprietorships and single-member LLCs who haven’t elected S corporation status, partnerships and multi-member LLCs. In addition, even corporations need one if they have federal contracts.
  • Pay on time -In the business world, there is one very important rule that often gets overlooked: pay your bills on time. If you are wondering how reliable you are at paying your business bills on time consider this: Every payment you make to a vendor or to a creditor has an impact on your business score and profile. Given that it can take more than 20 days to get paid by a vendor, and many businesses today are international in scope, paying late can be more common than we think. The National Federation of Independent Businesses (NFIB) conducted a study which established that paying late more than once can hurt your small business credit rating by 32 points, while paying 90 days late could damage your credit by as much as 240 points.
  • Get Incorporated – The first and arguably most important step in creating a solid credit history is to form a corporation or LLC. Doing so distinguishes your business from your personal credit profile, allowing you to apply for loans and establish business credit without the intervention or need for your personal credit.

The next stage is to develop solid business credit after you’ve secured business credit. Many of the methods outlined above will assist you in doing so, but it’s critical to concentrate on two in particular to help you improve your business credit history.

Your company credit report frequently has more payment information than your personal credit report. Pay on time, even early if possible, and your company credit score will rise faster.

Conclusion:

Building strong business credit begins with creating a business identity and protecting it. Once your business identity has been established through positive recorded interactions with customers, vendors, banks and other organizations and individuals, it will create a reputation for your new and potential customers. The more credible and trustworthy this reputation becomes, the easier it will be to obtain the credit that you need in the future. Profitable businesses always welcome business credit applicants with open arms. They compete fiercely for the privilege of doing business with you because they know a repeat customer is an extremely profitable one.

Having a strong credit score is used by potential customers to determine how safe it is to do business with your company. A good credit score can win you more business, especially if the competition doesn’t have one. Your credit report can cause someone to either ask to do business with you or not ask to do business with you. So don’t worry about getting a high score. It’s worth the effort as a strong credit score will put more money in your pocket.

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