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10 Proven Ways to Establish Business Credit

Updated: Sep 20, 2023


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Establishing business credit is one of the most crucial steps you can take to ensure the success and growth of your company. Traditional lenders often require a strong credit history to provide loans or lines of credit, but there are alternative strategies to secure the funding your business needs. In this comprehensive blog post, we will delve into ten proven ways to establish business credit, enhancing your chances of obtaining the necessary capital to propel your company forward.


1. Establish a business credit profile

One of the best ways to establish business credit is to create a business credit profile. This involves setting up a business credit account with one or more of the major credit bureaus, such as Experian, Equifax, and Dun & Bradstreet.


By doing this, you will begin building a history of responsible borrowing and repayment that lenders can reference when considering your application for funding.

2. Get a business credit card

A second way to build business credit is by getting a business credit card. This will help you establish a solid payment history and show lenders that you can manage debt responsibly.


It is important to make sure you pay your balance in full each month so as not to rack up interest charges or late fees which could negatively impact your score.

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3. Open a business savings account and make regular deposits

A third way of establishing business credit is by opening a business savings account and making regular deposits in it.


This will show lenders that you have money saved for emergencies, which makes them more likely to lend you funds when needed.


It also demonstrates fiscal responsibility since many businesses fail due to lack of cash flow management skills!


4. Build your personal credit score before applying for loans or lines of credit

Fourth, if you are looking to borrow money from a lender who requires a business credit score, it is important to build up your own credit score first.


This will help reduce the interest rates you pay on those borrowings and make it easier to get approved.


You can do this by paying your bills on time, keeping your debt levels low, and not opening too many credit accounts at once.


5. Get a trade line established with your suppliers

One way to establish business credit with little or no borrowing history is by getting a trade line established with your suppliers.


A trade line is simply an arrangement where you agree to pay your supplier for goods or services in advance of when they are needed.


This allows them to build up a record of how much business you do with them, which can be useful in determining whether they should extend credit terms based on your payment history.


6. Use your credit card for business purchases when possible


Doing this will help establish business credit by showing lenders that even though things may change from time to time, you’re still responsible enough to pay off any balances owed before the end of each month without incurring interest charges.


If you have good credit and can afford to pay off any balances owed in full every month, then this is an excellent way to build up some business history without having too much debt on your books.



7. Request a letter of credit from your bank


If you are in the market for a large loan or line of credit, one way to establish business credit is by requesting a letter of credit from your bank.


This is basically an agreement where the bank agrees to extend you a certain amount of credit that can be used as collateral for future loans or lines of credit.


By doing this, you are building up a history with that lender and demonstrating that you are reliable when it comes to borrowing money.



8. Get involved with industry associations and trade groups


Another way to build business credit is by getting involved with industry associations and trade groups.


Many of these organizations offer their members the opportunity to become ‘approved vendors’, which can help you establish a relationship with potential lenders.


Additionally, many of these organizations offer their members credit monitoring services and other resources that can be helpful in establishing and building business credit.



9. Use a business credit monitoring service


A ninth way to build business credit is by using a business credit monitoring service. These services are designed to help businesses track their credit score and payment history as well as identify any errors or inaccuracies on their reports.


This can be helpful in identifying any negative information that may be impacting your score and taking steps to have it removed.


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10. Stay organized and keep accurate records of your business finances

Lastly, the tenth and final thing you can do to establish business credit is by staying organized and keeping accurate records of your finances.


This means making sure that all financial transactions are recorded properly (including those made on behalf of the company) and filed away in an appropriate place such as a filing cabinet drawer or computer file folder designated for this purpose only.


Doing so will help ensure that if any discrepancies ever arise from either party during an audit or investigation process, they are quickly addressed before they become serious problems.


By following these ten tips, you can increase your chances of establishing business credit and building a positive credit history.


Establishing business credit is a pivotal step in securing the future success of your company. While traditional lenders often demand a strong credit history, our exploration of these ten proven methods provides viable alternatives for obtaining essential funding. These strategies range from building a business credit profile and acquiring a business credit card to maintaining a well-organized financial record.


By diligently following these steps, you not only enhance your chances of obtaining financing but also demonstrate fiscal responsibility and reliability to potential lenders. While it may require initial time and effort, the long-term benefits of a robust business credit history are invaluable, ensuring your business's financial health and prosperity. Best of luck on your journey towards establishing strong business credit!


 

At Office In America, you can find all the operating services your business needs,

including starting your business credit. When you want to establish credit, you need a business address and a 411 listed business phone number. Start now with our Basic Package for these services and more. We look forward to hearing from you and to being a part of your business success.



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