How to Start a Corporation With Bad Credit

A corporation can succeed despite bad personal credit.

A corporation is a legal business entity that is separate from the owners or managers of the business. Corporations have their own Employer Identification Number (EIN) that acts as a social security number does for individuals. It is helpful to have strong personal credit to help a new corporation establish credit, but this is not necessary. You can easily start a new corporation even if you have had personal credit problems in the past.

Things You'll Need

• Employee identification number
• D & B number

Instructions

1. File your articles of incorporation with your state's corporation commission. Once these articles are filed, and all of the criteria established by the commission have been met, your corporation is official. You do not need to have any type of credit to officially start a legal corporate entity.

2. Apply for an Employer Identification Number (EIN) with the Internal Revenue Service. You can use your EIN to open a bank account or file a business tax return for the corporation. The application process is simple, and can be completed instantly at the IRS' website (see Resources).

3. Open a business bank account with your new EIN and apply for overdraft protection. While you are opening the account, ask your account representative if there are any credit lines or special offers that are available for new businesses. Even overdraft protection will help start your financial reputation at the bank.

4. Get a Duns and Bradstreet Number. Obtain this by requesting a DUNS from its website. A Duns and Bradstreet Number can help enhance your business reputation by showing that your business is a reputable one.

5. Share your Duns and Bradstreet Number with any merchants that you do business with. Merchants can report your payment records to Duns and Bradstreet, which will begin building your business credit. Paying your invoices promptly will help build the business credit faster and the business will have excellent corporate credit in a relatively short period of time.

Tips & Warnings

• Pay your invoices early to ensure positive reporting to Duns and Bradstreet.

• You should seek the advice of an experienced business attorney prior to filing your articles of incorporation, to ensure that your filing meets the criteria established by your state.

References

• Duns & Bradstreet: Get a D & B D-U-N-S Number
• Internal Revenue Service: Apply for an Employer Identification Number