The top ten strategies for building company credit are outlined in our guide on how to build business credit quickly.
The 10 Best Strategies for Building Business Credit
To create stable credit, we have broken it down into ten steps. The first five steps are the most important since lenders must assess your business as a legitimate business.
Creating credit for the company is the second phase in order to qualify for a loan. These are the steps that must be taken before the loan can be approved.
The third step, while optional, appears to accelerate credit-building by establishing corporate credit and making your company more creditworthy more quickly.
- Open a business bank account
- Invest in a Business Website
- Form an LLC
- Obtain an EIN number
- Get a Business Phone Number
- Set up Net 30 vendors with a 30-day payment term
- Fill out an application for a business credit card
- In-Store Credit Card Applications
- Increase your Net-30 credit lines
- Apply for a Business Loan
In order to establish business credit, the first five steps should prepare for the application process and approval process.
1. Register as an LLC
Business loans are generally only available to companies that are incorporated as legal entities.
For banks and lenders, what benefits do legal business organizations provide? In addition to protecting the lender and company’s assets, a formal corporation creates a legal mechanism between the company and the business owner due to the limited liability protection law firms are afforded.
Having a limited liability company makes it less likely that the firm’s assets and activities will be damaged if a business owner gets sued.
A legal corporation protects the personal rights of the business owner due to the fact that the company now has its own corporate identity. In the event that your firm is sued or goes bankrupt, it’s a good idea to form an LLC.
2. Apply for an EIN
An Employer Identification Number (EIN) is required by the IRS for most businesses. This number is the equivalent of a Social Security number for small businesses. Your EIN is linked to your business credit profiles, just as your Social Security number is linked to your personal credit profile. Your business credit is evaluated by lenders using this score to gauge your creditworthiness.
The EIN is a number that must be provided for a business bank account to be opened. When you have an EIN for your business, it will start building your own credit history.
3. Open a Business Bank Account
An individual’s personal and professional finances are kept separate in a corporate account. Lenders, banks, and creditors frequently use business bank accounts to determine loan and credit eligibility. Limiting your obligation and isolating your corporate credit file from your personal credit history is critical.
The number of transactions in your business account also helps lenders determine the value of your business and the likelihood that your company will repay the loan.
In order to grow your business, you’ll need a professional business account that can offer flexible terms and long-term support.
4. Design a Business Website
Your company’s credit history can be discovered easily by lenders if you have a good website, which plays a key role in whether or not your business is approved for a loan. If your company does not have a great website, lenders may raise an eyebrow.
In order for lenders to find out more about your company, your website must be efficient and user-friendly. It should reflect what your business does, who its customers are, where it is located, and what services and goods it offers, as well as create a visual representation of your company. I recommend Wise Web Pros if you wish to create a website for this purpose.
5. Get a Business Number
You can create and improve business credit by obtaining a dedicated business phone line. Having an established firm phone number published online, on your website, and on social media platforms is among the credit requirements lenders conduct to determine whether you meet certain credit requirements for businesses.
Small businesses can benefit from a VoIP service since their customers can contact a virtual office number instead of their regular phone line.
- Build your business credit.
Once your foundation is in place, you need to continue working on building a strong credit rating. Making it easier for you to extend credit to your business will help you build a strong credit rating.
As you proceed, you will improve on the previous stage. We recommend that you complete the steps as soon as possible in order to obtain business credit.
6. Open Net 30 Vendor Accounts
Invoices from Net 30 merchants give you 30 days to pay them after they have charged you for your order. You may start building credit if you establish opportunities on your business credit reports so that you may establish opportunities on your credit report as a result of these payments. In this way, you will be able to build your credit quicker.
In addition to helping you improve your company’s credit ratings, you’ll be helping to boost your chances of getting a business loan in the future by paying on time or even early.
7. Get a Business Credit Card
It could also affect whether you get a secured or unsecured corporate credit card, depending on your length of service with the company and your monthly earnings.
Online loan credit cards without deposits have a limit established by the mortgage company or issuing institution, while secured business credit cards require a deposit equal to the monthly spending limit
In the future, you will be able to qualify for higher credit limits if you make on-time monthly payments and keep your credit card limit under 50%. The major credit reporting bureaus will also reward these new company lines of credit if you make regular, on-time (preferably early) payments and effectively leverage your credit to expand your firm. Visit to learn more about their business credit-building services.
8. Apply in-Store for Credit Cards
There are a number of places that offer in-store credit cards that you might be interested in purchasing, just like a regular credit card. The only difference is that you must have an existing account at the store in order to use these cards.
Businesses can build credit by using secured credit cards, such as those purchased in-store. As a result of this improved credit history, the major corporate credit agencies will boost your company’s credit scores.
Try to get a credit card at a store where you do regular business. These stores might include office supply stores, big department stores, or places where you buy your company’s items.
9. Boost Your Net-30 Credit lines.
Calculate your credit utilization score by dividing your net 30 account balance by your credit line limit. Lenders prefer low credit balance-to-credit-limit ratios. When you increase your credit limit and you decrease your debt, you improve your utilization rate score. The credit score of your company improves as the usage rate rating improves.
This will allow you to get better loan terms and more credit.
You should be able to get higher credit limits from the net 30 merchants with whom you currently cooperate. This will also increase your company’s credit score if you make on-time payments for at least six months.
10. Get a Business loan
Often, business owners use business loans to expand their businesses quickly. These loans allow them to borrow larger amounts of money.
In order to optimize credit, businesses must adhere to the aforementioned criteria, make on-time payments, and adhere to the best loan terms possible.