Having commercial credit is of the utmost importance to be able to qualify for commercial loans, contracts with the city or with the government and be able to qualify as a supplier for large companies, without having to mix your personal credit with that of the business. As well as your personal credit score, a good commercial credit indicates that you are a reliable customer, and with this, the banks understand that they are not taking a very big risk when offering a loan to your business.
Before starting to create credit, it is good to check if there is already a record in the name of the business. Some agencies, such as Expecredit and Equitem, automatically maintain a record using collection information and cut records. This also means that there may be incorrect information in the record of your business, something that undoubtedly lowers the credit score and it is important to clarify with the agencies or companies that have reported the information.
The commercial credit score is from 0 to 100, and of course, the higher, the better. A commercial credit record is not created in a day or a year, and that is why it is important to start this process long before you need a loan with good terms. These basic steps will guide you in the process:
Try our business loans today
The most important step is to get your first business loan, we can help you with this, you can start your process here. By borrowing money and returning it, the credit bureaus see your behavior as a borrower, and this is reflected in your credit score.
Create a corporation
The first thing you should do is incorporate your business, be it a corporation or a limited liability company. What this does is create a legal division between you and your business, or in other words, protect you from your assets from any legal proceeding against the business.
Obtain a federal tax identification number
The federal tax identification number, known as the Employer Identification Number in English, is the identification number of your business in the Internal Revenue Service (IRS). Just as your Social Security number allows you to declare taxes and create personal credit, the EIN has the same function for your business.
Open a bank account
Having a bank account exclusively for your business is extremely important because it is the easiest way for lenders to see your cash flow. The credit bureaus will also be able to see how you manage your finances and use that information to determine your credit score. A bank account with several years of existence also gives lenders even more security.
Buy your merchandise from sellers who report to credit bureaus
Sellers can also report to the credit bureaus, especially when they allow you to paydays or months after the transaction is made. You only have to investigate with the same sellers if they report or not and try to always get the inventory you need from those companies because it is of great benefit for your credit record. Just as you would do if it were a credit account, do not forget to pay on time or before so that it reflects that you are a good customer.
Get a DUNS number
The company Dun & Bradstreet is the most used credit agency by sellers and lenders, but you have to apply to be able to open a credit file with this company. The DUNS system is an identification process for businesses. When you apply, you receive a 9-digit identification number (DUNS number). The process is completely free but can last up to 30 days. It is not a requirement to be registered in this agency, but the credit ratings of this agency are used in the whole country and even internationally.