How to Create a New Credit File for a New Business
Creating a new credit file for a new business is rather simple, but it does take time. Any incorporated company can start building business credit, which automatically creates files with the corporate credit reporting agencies Dun and Bradstreet and Experian Business. Before deciding to create a new credit file for a new business, it is important that the owner has in place basic documents such as articles of incorporation, a business license, a dedicated company telephone line, and preferably a corporate checking account.
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Things You'll Need
- Articles of incorporation
- Employer Identification Number (EIN)
- Business license
- Dedicated business telephone number
- Corporate checking account (optional)
Instructions
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Gather your business documents before applying for any corporate credit. You should also ensure your company telephone number is listed with 411 (this can be done by speaking with your telephone provider) and that you have your Employer Identification Number (EIN) handy. Remember not to use a Post Office box or private mailbox service for your business when applying for credit, as such addresses are typically red-flagged by lenders and credit reporting agencies as possibly fraudulent. You can use a residential address if you are working from home.
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Obtain net-30 accounts from vendors such as ULine, Quill, Granger and Wearguard. This is a quick way to start building a new business credit file. Net-30 accounts allow you to receive goods and then pay for them within 30 days. Order some needed items for your business or personal life and check the invoice option online to automatically start such accounts.
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Make your payments on time or early. Most likely, you will need to mail in checks or money orders to pay your invoices, though some vendors will accept a personal credit card over the phone for invoice payment. Remember not to pay your invoices even one day late, because this is considered a negative credit event when building business credit. Within a month or two, this will automatically create a positive credit file with Dun and Bradstreet and Experian Business (see Resources).
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Apply for office supply store credit cards, such as those from Office Depot and Staples. These are often the easiest to obtain when getting started with a new business credit file. Most business credit cards have online applications accessible directly from the store's website.
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Use any credit cards you get to make small purchases, and then make your minimum monthly payments early or on time. Most credit cards allow online payment from a personal or business checking account.
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Obtain more credit cards as needed. It is usually best to wait at least 4 to 6 months after first creating your new business credit file. Other good bets for business credit include other office supply stores, department stores and gas stations.
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Check your own credit with Dun and Bradstreet and Experian Business as needed. Once you have a PAYDEX score of 80, your new business should have few problems obtaining credit. Paying several bills on time or early is the quickest way to get a positive business credit rating.
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