How to Increase My Credit Score With a Merchant Line of Credit

A merchant line of credit is an additional credit line used for business or corporate financial purposes. Because a merchant line of credit acts like a regular line of credit, a merchant line of credit and business credit card have the potential to affect both your personal credit score and your business's credit score (i.e., PayDex, the numerical credit score assigned to businesses by credit bureaus).

Difficulty: Moderate

Instructions

1. Understand how a merchant line of credit interacts with your personal credit score. A merchant line of credit will not directly affect your personal credit score, though it will affect your business's credit score (PayDex). However, adding a merchant line of credit to your financial portfolio can strengthen (but not raise) your personal credit score by adding an additional level of measurement that financial institutions will see when reviewing your personal credit history.

2. Apply for a merchant line of credit by opening a business credit card with the financial institution of your choice. When you apply for a merchant line of credit, the financial institution will run a credit check on your personal credit score because your business will have no credit history under its own name. Thus, only apply to banks or financial institutions that will accept your application based on your personal credit score.

3. Consider opening a Data Universal Numbering System (DUNS) account. Your DUNS account number is a nine-digit identification code used to track businesses and is recognized by most major world governments. Many retailers, such as Viking or ULine, require a DUNS account number before your business can open a merchant line of credit with them.

4. Manage your merchant line of credit appropriately. Pay your business bills on time, especially to retailers that utilize your DUNS number and thereby report your financial standings directly to the D&B (the organization that manages business credit scores and the PayDex).

5. Maintain activity on all merchant lines of credit and business credit cards. Failing to utilize your merchant line of credit regularly will cause your business's credit score to fall.

Tips & Warnings

• Apply for a merchant line of credit early in your business's history to begin establishing a positive PayDex credit score.

References

• "Credit Card Manual." Federal Deposit Insurance Corporation. 2007.

Resources

• Apply for a DUNS Credit Number

Who Can Help Sponsored

• How strong is your score?  Did you know checking your own credit won’t affect your score? Click here to see yours in two easy steps from Experian.

[jimfretiolner]

on 11/26/2009 Great article 5 stars for that information

I have been stuggling to find a good and cheap site for credit report.My friend told me that I can get my a free credit report, credit score and credit monitoring free trial.This site also offer free credit fraud alerts.This site is really cool and I thought I would help everyone to share it here:

http://www.CreditReportFrees.Info