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How to Build Business CreditBuilding your business credit rating is as important as having a good personal FICO score, perhaps even more. Just as it is very difficult to obtain personal loans or mortgages if your FICO score is less than 620, obtaining business financing is also not possible unless you can build up your PayDex score to at least 70. You might be able to convince the lenders to provide finance for your business proposal based on your good FICO score but the rate of interest charged by them will completely upset the viability of your project. Moreover, you would have to personally guarantee each time you took a loan for your business. Another important aspect is that you must not make multiple applications for loans as this will completely jeopardize your personal and business credit rating.Steps towards Building Business CreditThe process of building up your business credit rating cannot be achieved in one day but it needs a detailed planning, and sustained and determined effort to lift your rating to the level that will make it easy for you to get business financing. The various steps that need to be taken care of are: your business must have a legal entity; the name of your business, its address, phone numbers, and tax ID number must be provided to all agencies and trade credit vendors exactly in the same fashion; there should be a physical location of your business; your telephone and fax line numbers must be listed under your exact business legal name with the directory assistance services; the business should have an email address and its own website with the business domain name; proper business license and tax resale license should be obtained; financial statements of the past two years should be maintained; both Federal and state business tax ID numbers should be obtained, keeping the same business entity legal name; a proper bank rating should be earned as part of a bank reference; get a Dun and Bradstreet number so that credit feedbacks are fed into it for the credit rating to start building up; and last but not the least, ensure that trade references are regularly sent to the credit reporting agencies indicating that your business has been making its payment obligations on time.Favorable Trade ReferencesThe ultimate aim of all the above steps is to ensure that you are able to achieve a minimum PayDex score of 70, preferably 75 or above. This can only be done if you are able to obtain at least five trade references that would be reporting to the D & B credit agency giving favorable feedbacks regarding your payments to your suppliers being no more than seven days slow or better. This will establish a good credit history so that your business credit score gradually moves up.Just as you need a long sustained effort to build up your personal credit score by paying all your bills on time and not faltering on any of them, building a business credit score also needs a determined endeavor mainly in the field of discharging your business debt obligations on time. There are many online sources to help you with all the above said issues.
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