How to Establish Credit for a Business From Personal Activities

When you're just starting out as a small business owner, you may find it difficult to establish credit for your business. The only history you have is from your personal activities. But over time, your personal activities will begin to become associated with that of your business, especially when you are organized as a sole proprietorship or partnership. The credit history of a corporation is usually considered completely separate from that of the individual owner.

Instructions

1

Open business credit card accounts using your own personal Social Security Number rather than your employee tax identification number. List your business name. Some business credit card companies will ask for your personal guarantee regardless of how your business is organized. This will help associate your personal credit history with that of your business.

2

Make personal (and business) purchases on your business credit card and pay off the balance before the end of the billing cycle with your personal funds. This way you will avoid interest charges while establishing a positive business credit history from your personal activities.

3

Purchase a personal home and make prompt payments over the course of two years or more. Business lenders look positively at business owners who own personal homes and are prompt with their payments.

4

Apply for a business loan using your personal credit history as a guarantee on the loan. If denied, you can apply for an SBA loan, where the government guarantees a portion of your business loan. The SBA looks at your personal activities and credit history when deciding on whether to grant you a business loan.

5

Purchase or lease a business vehicle in the company's name, but make the payments from your own personal accounts.

6

Always pay your suppliers on time and ask them to report your positive payment history to a business credit reporting service like NACM Business Credit Service. As a new small business you are looked at by suppliers as a person rather than as a business. If you keep your commitments with suppliers, you will get better, more flexible payment terms and have positive references to use when seeking new vendors in the future.