How to Build Business Credit with Bad Personal Credit

by | Jul 20, 2021 | Bad Credit Business Loans, Business Financing, Financial Advice

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Even though your business credit and personal credit are different, they also have similarities. In most cases, business owners try to keep their personal and professional credit profiles as far apart as possible. This prevents disruptions in your personal credit profile from having a negative effect on your professional credit and vice versa. It is possible for you to build positive business credit even though your personal credit isn’t perfect.

Get Your EIN

The first step in building your business and establishing a good credit foundation is to get your EIN (Employer Identification Number). This number will establish your company as a business entity. It will open the door to working capital, increased revenue, and the opportunity for growth and expansion as your company continues to blaze new trails and forge new paths.

Create a Dun & Bradstreet Account

A Dun & Bradstreet is a credit reporting agency for businesses. They monitor business credit just like the three major credit bureaus monitor your personal credit profiles. Creating a Dun & Bradstreet profile will allow you to keep a close eye on your company’s credit. Checking it regularly will help you make sound business decisions.

Apply for Vendor Tradelines

Many companies will offer tradelines to other businesses they work with. By offering you credit, they retain your business and both of you are allowed to gain financial ground. You by getting what you need and paying over several months. The vendor by moving their product and earning a little interest in the process. An added bonus for you is if they report the loan and your payment history to the credit bureaus.

Apply for a Business Line of Credit

Business lines of credit include small business loans, secured and unsecured credit cards, and trade accounts with your vendors. Applying for a business line of credit will give you a little working capital that you can use to build your business. Making regular payments is the best way to establish a positive credit history.

Check Your Credit Reports for Your Business

The credit reports for your business are designed to show not only your company’s creditworthiness but also its growth. Monitoring your reports on a regular basis will help you keep track of your company’s payment history and help you build a solid credit history that will benefit you over the long term.

Work to Improve Your Personal Credit

One of the best ways to improve your business credit is to get in the habit of improving your personal credit. While the two aren’t reliant on one another, both will benefit if you use the same positive habits to build both credit profiles. Building credit for your business doesn’t have to be a challenge. You may have more opportunities to build a solid credit history simply by working with other businesses. You can establish credibility by using resources like Dun & Bradstreet and opening tradelines of credit with other businesses. It’s also a little easier to apply for a small business loan and use the money as working capital. Take a few minutes and talk to a lender. You might be surprised at how easy it to get the funds you need.