How do you establish a business credit report?
A business credit report is an essential tool that can help you secure financing for your business needs. In addition to securing financing, a positive business credit report history will enable you to receive the most agreeable terms and interest rates.
To initiate your business credit report, here are some steps you will need to take:
Incorporate or form an LLC (Limited Liability Company) to ensure your company is seen as a separate business entity
Obtain a federal Employer Identification Number
Open business bank accounts in your legal business name
Set up a dedicated business phone line in your business name and make sure it's listed
Once you have completed the above steps, you can apply for credit in your company name. These tradelines or business transactions will then be reported to the business credit bureaus Experian, Dun & Bradstreet (D&B), and Equifax. It’s important to note that not all companies report to the business credit bureaus, so you will want to try to work with those who do.
By establishing your business credit and report, you are separating your business transactions from your personal credit, which will prevent one from affecting the other. However, you will still want to take all of the necessary steps to maintain a positive credit history, including paying your bills on time and keeping your credit utilization low.
Just as it’s imperative to check your personal credit reports at least once per year for proper credit maintenance, you should monitor your business credit report regularly to ensure the information is accurate and up-to-date. You can access your Experian business credit report here.
For continuous business credit report monitoring, Experian offers Business Credit Advantage. This service will alert you if a change to your business credit report could negatively impact your business, prevent business identity theft, monitor inquiries, and more.