How to Build Business Credit for Business Owners

Having your own business is exciting, but becomes chancy if your personal assets are at risk. Thus, as a business owner, you should build business credit separate from your personal line of credit. Though it may take some time to establish business credit, you will have peace of mind knowing your business' financial status does not reflect on your own personal credit.

Instructions

1. Form an LLC (limited liability company) or incorporate. This will establish your business as a separate entity, unconnected to your personal credit profile.

2. Write a business plan. Having a well-thought plan shows you are serious about having a viable business and serious about making it long-term.

3. Get a Federal Employer Identification Number (EIN) and a Dun & Bradstreet (DUNS) number to help establish a business identity. This is what you will use on business forms in lieu of your Social Security number. You can apply for an EIN through the Internal Revenue Service and a DUNS number through Dun & Bradstreet.

4. Open a business bank account. Keep business and personal funds separate.

5. Register with the business credit bureaus under your company's name. Report your transactions and payment history with credit bureaus such as Experian, Dun & Bradstreet (DUNS) and Business Credit USA to build your credit score.

6. Obtain business credit cards not linked to your personal credit. It will be easier to obtain credit with certain companies friendly to new businesses, such as office supply companies. Pay in full all balances obtained with these lines of credit, and your business credit will mature over the next few months. Then, you will be eligible for more lines of credit.

Tips & Warnings

• Always pay all your business bills on time.

References

• My New Company: Build Business Credit Online
• Entrepreneur: The ABCs of Business Credit
• Corporate Credit Concepts: Obtaining Business Credit