Introduction
If you’re a small business owner, it’s important to manage your credit. Not only will your business benefit in the short term with access to capital, but also over time as you build a strong credit history. Here are some tips that can help build your business credit for 2022:
Get an EIN.
You need an EIN to open a business bank account. You’re going to need it anyway, so you might as well get one now so your company can open its first bank account.
An EIN is not just a number; it’s a tax identification number that allows you to file taxes on behalf of your business. It also serves as the identifying number for all companies whether they have employees or not, whether they are incorporated or not, and if they are private or publicly traded companies.
EIN stands for Employer Identification Number and it is issued by the IRS (Internal Revenue Service).
Check your credit reports regularly.
Checking your credit report is a good way to see how you’re doing financially. The more frequently you check it, the more likely you’ll catch any errors that might be on there. If you find errors, it’s important to get them fixed as soon as possible. Otherwise, they could hurt your score and prevent you from getting approved for things in the future.
If everything looks right and there are no problems with your credit report, that’s great! This means that all of your accounts are up-to-date and paid on time and nothing else needs attention—except maybe checking back again in a few months!
Keep your business name, address, and phone number consistent across all business accounts.
- Keep your business name, address, and phone number consistent across all business accounts.
- This will help reduce confusion for customers.
Use a business name to open business credit accounts.
When you conduct business, always use a business name. Use the same business name on all your accounts, contracts, and invoices. Use it on your receipts and statements as well.
Avoid hard pulls by using soft pulls to gauge credit offers.
Don’t let the name fool you: soft pulls are not any less accurate than hard pulls. In fact, they can be just as good or even better in some cases. Soft pulls are free—they don’t cost you anything to do on your own. A hard pull on your credit report costs money, so it’s important to avoid them if possible!
Establish trade lines with vendors who report to the business credit reporting agencies.
Establish trade lines with vendors who report to the business credit bureaus.
A trade line is an account that your business has with a vendor, such as a bank or utility. If you have accounts with these vendors, they will typically report your payments to at least one of the major credit bureaus (Dun and Bradstreet, Experian Business, and Equifax Business). Another lesser-known Business Reporting Agency is Creditsafe. You can use a business credit card or personal card for this purpose if you don’t have a regular account set up yet.
Business Credit is not just for funding, but it will also help you get better vendor terms and can help you negotiate with suppliers.
Business credit can be used to help you save money on your monthly expenses. It will also allow you to get better vendor terms and negotiate with suppliers.
Suppliers might be willing to give a discount if they know that you have business credit because they’ll see that as a sign of stability in your company. You’ll have more bargaining power when negotiating with vendors as well, which means that they will be more likely to give in and give you the best price possible.
Conclusion
The key takeaway is that being in business requires more than just funding. As a small business owner, it’s important that you pay attention to your credit report and establish trade lines with vendors who report to the business credit reporting agencies. If you’d like to get more help, you can join our Free Facebook Group that covers Building Business Credit The Right Way! Here at JMS Consulting Firm, we also free non-obligated consultations for anyone who wants more information about building business credit.
