How to Build Business Credit Cards

Establishing credit for your business gives you better future credit options.

Building your credit and acquiring credit cards under a business name is important as this protects your personal credit. Establishing business credit protects your own personal credit history from being affected, if the business experiences any financial hardship. But it also establishes business creditworthiness, which can eventually qualify the business for higher dollar loan amounts such as mortgages or business loans.

Instructions

1. Register your business as a legal entity. This will separate the business credit from your own. You have several registration options and should consult with a business attorney for the best option, but most people either choose to structure the business as a corporation or as a Limited Liability Company (LLC).

2. Obtain a Tax ID number from the IRS (see Resources.) You will use this number instead of your Social Security number when you apply for business credit.

3. Apply for a DUNS number to establish a basic Duns & Bradstreet business credit file. This will keep track of your business financial history. Although it is not required by all credit card companies, it is required by larger financial institutions, and you will want it when you want to apply for larger credit limits or for a business real estate mortgage.

4. Obtain a small-business credit card like those available at office supply stores, hardware stores or department stores. These are easier to qualify for than the better-known credit cards. Make small charges on these credit accounts and pay them off on a monthly basis. By paying the entire balance off on a monthly basis you raise the business credit score.

5. Request a gas card once you have established some type of credit with either an office supply store or department store. These are a little harder to get and require some type of established credit. Charge gas but pay off the balance every month to keep your credit rating high.

6. Apply for a major credit card after a few months of making small charges on the other smaller credit cards. If you have paid off the balances monthly, you should receive authorization for a major credit card under the business name.

7. Request a secured credit card using the business name and tax ID number, if you are denied a major credit card when you use normal application methods. These secured credit cards will require a deposit and give you credit in the deposit amount. Make small charges and pay the credit card off every month. After a certain amount of time (specified by the credit company) your deposit will be returned. Once you have established a credit history you can apply for a regular credit card with lower interest rates.

8. Review your business credit history periodically by requesting a report from any of the three credit reporting agencies Experian, Transunion or Equifax. Verify that all the information is correct. Clear up any mistakes with the financial institution reporting the information. Follow the same process in checking your Duns & Bradstreet number.

References

• MSN: Raise your Credit Score to 740
• Duns & Brandstreet Credibility Corp: Need Your Duns Number in a Hurry
• Baluart: Business, Marketing and Technology

Resources

• IRS: Taxpayer Identification Number