businesses, like individuals, also need to have
a good credit record in order to gain access to
lines of credit. This is a difficult task
for most small businesses because it requires
establishing the credit record from
Entrepreneures often make the mistake of using personal credit cards to get
their businesses off the ground without
transitioning into building their businesses'
credit. Hence, when they find themselves
in need of capital in order to grow the business
they discover that creditors are not willing to
lend without a credit history for the business.
You can obtain much greater credit under the
business name than can be obtained under your
a good credit record for your business can take
1-2 years. Start now and follow these steps to establish
a good credit record for your business.
Organization Type: If you're a Sole
Proprietor business you will need to change to a
C Corporation, S Corporation, LLC, etc.
Sole Proprietor businesses are not entities that
are separate from the individual with legal
protections in the way that other type of
organizations are. Hence, your
organization will not be able to have its own
separate identity that you can build a business
credit record for if it's a Sole Proprietorship.
Tax ID: Get a tax
ID. You will need it to register with
credit bureauas such as
Dun & Bradstreet
Establish a bank account in your business name.
Business Phone Number:
Establish a legitimate business phone number and
get it listed in a legitimate directory such as
411.com, yellow pages, etc. Lenders will
check the number to make sure they have a
legitimate way to contact you.
good financial records and get an accountant to
validate your records. This presents an
image to banks that you are running a legitimate
Establish positive cash flow. Lenders will
look at positive cash flow favorably as it
indicates your ability to pay debts.
Keep your business licenses current. Banks
will want to validate your business existence.
One of the first things they will do is to check
to ensure that your business is legitimate.
They will check with state databases to see if
the business is licensed/registered.
Register With Credit
Dun & Bradstreet
Experian are the two major
credit bureauas that track business credit
history. Resister with these bureauas and
start establishing a credit record.
Lenders will check for your business credit
record with these two bureauas before lending.
Be sure to check your credit report regularly
and verify the accuracy of the information.
Experian rank business credit scores from 0 to
100 with 0 representing the worse and 100
representing the best. Their scoring is
based on a number of factors. Visit the
Experian website to learn
what those factors are.
Establish Trade Credit:
Find out if other companies that you do business
with report payment history to credit reporting
agencies such as Dun & Bradstreet and Experian.
Some companies that might be willing to extend
OfficeMax, computer retailers (such as
Best Buy, and
Gas Stations. Reach
out to these organizaations and as them to
extend credit to your business. Credit
with these organizations are extended on a Net
30, Net 60 or Net 90 basis. Meaning you
have 30, 60 or 90 days to pay it off. They
normally issue you credit by giving you a store
credit card to make purchases or as a line of
Pay Bills On Time:
If you have trade credit, utility bills and
other payments to make, be sure
to make your payments on time. Paying your
bills on time is key to maintaining good credit.
Pay ahead of time if you can. But, don't
For "Poor Record" Credit Card: Apply
for credit cards that are designed to help small
businesses with poor credit records.
PrePaid (Secured) Credit Card: You can get prepaid
credit cards and use them as a way to build a
credit record. PrePaid Credit Cards act like a debit card
because you have to deposit money onto it before
you can use it. But, it also acts like a
credit card and all transactions are reported to
credit bureauas and enables you to build a
credit record for your business. These are
some of the PrePaid Credit Cards you can apply
PEX: This is a Visa
prepaid card that requires no credit approval.
You add any amount on the card. You get
individual cards for your employees.
BankFreedom PrePaid MasterCard:
This card has no enrollment fee and is accepted
worldwide. It requires not credit or bank
The Master Card Business Prepaid Card:
This is a prepaid card that is accepted where
ever MasterCard is accepted. You can get
individual cards for employee.
For Normal Credit: When you're ready to get
credit from lending institutions visit
to see a lising of credit cards from all major
lending institutions that are targeted to small