Business Credit

You have a credit history. Your new start up business does not. But don’t let those two facts tempt you into guaranteeing the credit of your new business by using your own personal credit. Many business owners do this in order to start a business line of credit quickly, but this approach can cause you to end up lowering both your own credit score and that of your business, because inquiries into the credit of either are then tied together by a single number – your personal Social Security or Tax Identification Number.

Instead, take the time to build credit for your business the most effective way. First, register your business and get a Federal Tax Identification Number (FTIN) or Employer Identification Number (EIN) from the IRS. Any credit you apply for in the name of your business should be tied to this business FTIN or EIN, and NOT to your own Social Security Number. This way, your business will have its own credit report and its own credit history. 

 

Establishing Business Credit

The following major credit bureaus compile and provide copies of business credit reports:

  • Dun & Bradstreet
  • Experian Business
  • Equifax Business
  • Business Credit USA

However, bear in mind that a business credit score is different from a personal credit score. Business credit scores can range from 0 to 100. To have an excellent rating, a business needs a score of 75 or more. In contrast, your personal credit score can range from 300 to 850. An individual needs a score of 680 or higher to be considered excellent. However, events that affect a business’ credit, whether positive or negative, are reported to business credit bureaus voluntarily. That means that a company could be in business for quite some time before any of its transactions are ever reported to a credit bureau. To speed up this process, you will need to register your business with the credit bureaus (using its FTIN or EIN) and comply with all business credit market requirements. Once that is done, you will need to obtain credit for your business from an institution that grants credit to new businesses without requesting a guarantee from the personal credit of its owner or owners.

To help you get started building your business credit history, My Corporate Services Inc. has created a product called the Credibuilders® Signature Loan – the name says it all! To apply for a CrediBuilders® Product, please VISIT THEIR WEBSITE! 

Disclaimer: My Corporate Services Inc. is a service company and does not offer legal or financial advice. © MyCorporateServices.com, 2012 All Rights Reserved