Small business administration has clearly stated that the number one problem facing business owners today is lack of capital.
This post is going to talk about some simple and easy methods on how to easily get started building business credit the right way.
The idea behind business credit, and building up to getting the types of credit that can be utilized for a business effectively, is to start small and slowly work your way up the credit hierarchy.
Many business owners tried to go straight for a five or $10,000 credit card thinking that this is a small business lines of credit. when building business credit or any type of credit, it requires you to establish smaller credit first to ensure you’ll be approved when applying for larger limits.
The best thing to do is start out with a cell phone with Nextel, or a DHL shipping account and be sure to set up a business account that will report to Experian or Dun & Bradstreet. A net 30 account requires that payment is due in 30 days, this will establish a track history and allow you to have some sort of Paydex score payment history reporting against your company name and business profile. it is important to have a Dun’s number before applying for any credit. A Dun’s number can be obtained through Dun & Bradstreet, a major reporting bureau for business.
The next step would be to apply for vendor trade lines such as Staples, OfficeMax etc.. These types accounts would typically give you a credit line of approximately $500 to thousand dollars and can be utilized for home office, is as office etc.. It’s important to by product each month and pay it off or make the payment, do not just buy one item make one payment paid off and leave it paid off. The idea is to acquire a pay history, and a positive one is important.
Once you have five or six of these smaller accounts reporting for a number of consecutive months, only then will you be in a position to start seeking out credit cards that will lend you money based on the number of months you been in business and your business credit score.
These credit card companies are few and far between but with proper research are certainly. Out there and once you make timely payments with these credit card companies your next step will be a bank line of credit which will be much easier to get because at this stage you should have between six and 10 trade lines reporting.
