Building Business Credit
View PDF | Print View
by: leeroger2054
Total views: 9
Word Count: 465
Date: Mon, 12 Sep 2011 Time: 5:33 AM
There are several steps in building business credit. First you must have a business with a separate EIN or Fed ID number. This means you need to be a corporation or an LLC or a partnership, an EIN is an employer identification number and FID is Federal Identification Number, the FID number is issued for tax purposes as well as for employer returns, where the EIN is used for filing employment returns only. These numbers are interchangeable. One is tied to you as an individual and the other is tied to a corporation as a separate entity. If you are going this far to develop business credit you might as well set up a corporation so that it can be a standalone entity and provide you the protections of a corporation or LLC.
Now that you have this all important number, it is like your social security number same digits and used the same.
It is important to maintain excellent personal credit. In the beginning all of our credit will be based on your personal credit until you develop a credit history for your business.
It is just as vital to maintain an excellent credit history for your business.
The next step is to secure credit before you need it, getting your first business loan is going to be a long stressful project in today's environment so be prepared for a slow approval process. Apply well in advance and be prepared.
Whether you get a line of credit or a business credit card, use the credit and pay it off. Don't keep it for a rainy day, the more you flex your muscles the bigger they will grow. Having a line of credit that is hardly used does nothing to improve your credit score. Using it to the max and paying it off generates huge credit ratings. Also your lender may think if he gives you more credit you will use it generating more income for him and you might see an automatic increase.
Even though banks today are not what they use to be, it is important to build a relationship at least with the loan officer, granted he might be there today and gone tomorrow but if you have a good relationship he will call you from where ever he is. If he has been moved in the same bank he can still work with you, if he has changed banks, he might offer you better programs to move with him.
It doesn't matter if your account is large or small these steps apply to both. It works the same if you want $10,000 or 90,000. All new businesses are the same and all small businesses are classified the same. Never let the bankers scare you, know what you need and want and tell them.
About the Author
Barry Norman is a contributor to and blogger at SmartBusinessCreditCards.com. Visit now for more small business financial news, small business loans and business credit.
Rating: Not yet rated
