How to Establish Business Credit Without Using Personal Credit

Credit cards can be in a person's name or a business name.

Establishing business credit and personal credit is not an easy task. Creditors are not willing to take risks on a consumer who hasn't proven he can handle debt. Keeping personal and business debt separate can be done but will require time and patience to build your business credit.

Personal Guarantee

You will be asked by potential lenders to provide your personal information as a personal guarantee, in many cases, when you are first establishing business credit. Do not do this if you want to keep the credit separate. Tell any creditor that you do not want to provide this information, and want the credit solely in the business name, and ask if there is anyway to do this. Do not continue if the company insists on your personal guarantee. There are other ways to build your business credit -- although it will take time.

Get Registered

Make sure you have an Employer Identification Number with the IRS. You can apply for one online at www.irs.gov if you don't already have one. Register a business phone line if you haven't already done so. Make sure the number is listed and is in the business name. Next, register with Dun & Bradstreet (D&B). D&B is the credit agency for businesses, and any potential lender is going to want to see you listed with the agency. As you gain credit, your credit history will be provided to D&B, and you will begin to build a credit profile. (see Resources)

First Line of credit

Apply for credit with an office supply store. Office supply stores are known to offer a small line of credit to new businesses. Your business phone line will be checked to see if it is listed under the business line. Your initial credit line will be small. Also contact your local bank or credit union that handles your business bank account. Ask if a secured credit card or line of credit is available for your business. You will be required to deposit the money you wish your credit line to be, but after a certain amount of time has passed, the bank will convert the account to unsecured.

Maintaining

Maintain any account you get well by keeping the balances between one and 20 percent of the credit limit, and making all payments on time. After the accounts have reported six months, you will see your business credit score rise. After 12 months you should be able to apply for an unsecured credit card or loan in only the business name as well and will not be asked for personal guarantees, as your credit is established.

References

• Business Credit Blogger: Building Business Credit

Resources

• Dun & Bradstreet: Getting a DUNS Number
• Internal Revenue Service: Employer ID Number