How to Build Corporate Credit

Building corporate credit is essential for growing a new business and establishing credit worthiness. By building corporate credit, serious business owners can never be turned down for a loan and do not have to use their personal credit to finance their business. Business owners need to take action to establish corporate credit before they apply for loans, leases, or lines of credit.

Instructions

1

First, you need to prepare your company with a business credit assessment (what types of credit your business needs) because you must have a real business, not just a shell company. Form a Corporation or L.L.C. to operate your business. Get a Federal Tax ID number from the IRS, to separate your corporate activities and credit from your personal activities and credit.

2

Establish a business address and telephone lines so creditors can easy find you. Acquire all appropriate permits, licenses and fees to be paid to the federal, state and city governments. Check with your state government to find out if you meet all the compliance checks for your business. Contact Dunn and Bradstreet to establish a Data Universal Numbering System (DUNS) for your corporation.

3

Begin to look for vendors and lenders that will let you have business credit lines around $500 to $5,000. Check for reasonable rates and fees from these companies. Look for vendors who offer business credit for office supplies, computers or business furniture such as Office Depot.

4

Credit bureaus will use this early payment history to begin developing your corporate credit profile, so pay these vendors on time. By establishing good payment histories with these companies for the next six months, you can get bigger credit lines and loans. Gather at least six companies to report on-time payments to the credit bureaus on your corporate profile and establish a Paydex accounting system to payback these companies.

5

Now you are eligible for larger credit lines of $5,000 to $50,000 and can apply for this type of funding. Repeat the same process for these companies and pay all bills on time. You can now move on up to unsecured business credit from banks and other lenders in the range of $50,000 to $250,000.

6

At this step, the lenders will probably require a personal credit check and guarantee from you. You will need to start early building up a strong personal credit record and have a corporation with strong sales and future business growth. Prepare a detailed and concise business plan to offer to the lenders with the purpose of the loan, exact amount of money used, company needs and for how long and how your business will repay the loan.