subject: Building Business Credit: Top 25 Rules [print this page] There are many obstacles that face every aspiring entrepreneur as they strive to do all the right things in order to make their dream business a reality.
It can be an overwhelming experience especially if you have limited support, funding and tools at your disposal. Whether you have a product or service to bring to the marketplace careful planning and execution can greatly improve the success of your new venture.
To help you in your preparation I have assembled my top 25 rules which can greatly improve your ability in obtaining the credit your company needs.
1) Select the proper entity structure that best serves the needs of your business.
2) Choose a business name that does not trigger red flags with the business credit bureaus.
3) Assemble a winning financial team that understands the nature of your business and its vision.
4) Avoid selecting a high risk SIC and NAICS classification code for your company.
5) Do not use a P.O. Box as your business address. However, a P.O. Box for your business mailing address is acceptable.
6) Verify that your business is 411 listed prior to applying for credit.
7) Always use the same exact business information when you complete registrations, applications and documents.
8) Have a fully functional company website before applying for credit. Parked domains and web sites under construction are immediate red flags.
9) Do not use a free email account for your company email address.
10) Establish a "low 5" bank rating as soon as possible in order to build bank credit.
11) Obtain diverse credit account types in order to establish a strong business credit profile.
12) Pay invoices 10, 15 or 20 days ahead of the due date.
13) Use your credit on a consistent basis in order to establish good payment history.
14) Keep debt to credit limit ratios at no more than 30% in order to minimize your company's debt exposure.
15) Utilize all credit types (business credit cards, business charge cards, business debit cards, prepaid business credit cards etc.) to your advantage as each one serves a unique purpose.
16) Use secured business credit cards in order to start building corporate credit for your company.
17) Start a personal credit recovery plan if you have less than perfect credit.
18) If you process credit card transactions on a monthly basis then consider using a merchant card in order to access cash at your convenience.
19) Extend credit to consumer and business customers and increase sales by as much as 50%.
20) Report the payment experience of your business customers to the business credit bureaus.
21) Get your company listed with the major business credit bureaus.
22) Establish a reporting bank loan on your company credit profile.
23) Create a complete and sound business plan for maximum funding ability.
24) Monitor your business credit profiles.
25) Add positive trade references to your file through DNB's trade reference builder program.
Each of these rules play a significant role in the success of your business credit building strategy.
The more rules you follow the greater the impact it has on how successful you are at obtaining the financing your company needs.
Let these rules serve as a helpful guide as you strive towards establishing business credit without putting your personal credit or assets at risk.
by: Marco Carbajo
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