How To Build Business Credit
What Is Business Credit?
Business credit is a type of a credit, which is simply a track record of the financial responsibility of a business. The businesses are run by the business owners, investors or companies, which foretell about standing position of the business in the market – determining whether the business deals may be finalized with a particular business or money should be lent or not.
Why Is Business Credit Important?
Good credit is really important for a number of reasons. Firstly, it allows you to obtain the funds required for the expansion of the business, research and development, capital expenditures and other things. Business credit is also important as good credit business earns the business lower rates, easier loans etc. Good credit also increases reputation and standing within the market. This is why, good credit business is important.
How To Build Business Credit?
Understanding the importance of the business credit, you should try to grow your business credit over a long period of time. Here are some of the ways which will tell you how to build business credit:
Incorporate Your Business
Following the local laws, you should register your business enabling you to operate lawfully within the US.
Obtaining Federal Tax Identification Number
After successful incorporation of the business, you will receive an Employer Identification Number or EIN from the IRS.
Opening Bank Account
Now, it is time to open your business bank account so that all the transactions – carried out under your business name – are realized through this bank account.
Establishing Business Phone Number
Your business must also have its own business phone number. This would be required to open a business credit file.
Opening Business Credit File
You must fulfill all the requirements asked for filing for opening business credit successfully.
Obtaining Business Credit Cards
Having followed all of the above instructions, you should be able to obtain the business credit card now.
Establishing Line of Credit
Now, you must be able to establish the line of credit having obtained the business credit card. Usually, a bank may require you to have a good revenue for a number of years previously which will actually make you qualify for the line of credit. Thus, you can build your business credit.
You should always check the terms and conditions of the business card you have applied for. While opening business credit file, you should read each and every line cautiously.