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Business Credit

What is Business Credit?

Business credit is similar to personal credit.  It evaluates your trustworthiness as a borrower, using a credit report and a credit score. Personal credit is linked to your Name and Social Security Number. Once you Incorporate your business you receive a federal tax Id number and your business credit is linked to that. It keeps your personal finance and business finance separate, limiting your liability.  Any changes in your personal credit won’t affect your business credit and vice versa. The credit reporting bureau is known as Dun & Bradstreet.  Your business will be assigned a number known as a DUN Number.

What are the benefits of Business Credit to you as a company?

  • Builds your company image
  • Protect your personal credit
  • Limit your liability
  • Increases your credit capacity
  • Businesses can obtain 10 to 100 times greater financing than an individual

What is a D&B D-U-N-S NUMBER?

It is a unique digit identifier for businesses.  It is used to establish a business credit file, which lenders use to predict the reliability and financial stability of a company.  The initials D-U-N-S which stands for Data Universal Number System is assigned to businesses to maintain their accurate and timely information for credit reporting.  

 

HOW TO BUILD BUSINESS CREDIT FOR YOUR START-UP?

Statistics show that over 65% of all businesses owners use credit for business purchases. Statistics also show that only 50% of those cards are actually in the business name.  As a business owner, you take a big risk by using personal credit to aid in the building of a new business.  You risk your personal assets and your personal credit rating.  Business assets and personal assets need to be separate in order to protect yourself and your family. Steps to take to begin building business credit.

  • Incorporate your business and obtain a Federal Tax ID number
  • Register with a business credit bureau such as Brad & Dun Street to get Dun Number
  • Make sure corporate filings, state filings, and business license are up to date
  • Get your companies phone number listed in 411 directory
  • Now you are ready to apply for credit with suppliers

Recommended resources to help you to understand Business Credit:

 

 

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