Establishing Business Credit

When you start a business you do not want your personal credit associated with your business credit. The reason for this is pretty basic. If your business struggles you do not want any negative credit factors affecting you personally. And if your personal credit history is spotty, you do not want that to hinder your business developing credit. In order to establish business credit separately, you must either incorporate your business or form an Limited Liability Company (LLC). You then need to obtain a Federal Employer Identification Number. Then, open a bank account under the legal name of your business. Do not open a personal account. Make sure it is in the exact name of your business. You also need to get an independent phone number that is listed under the name of your business. Now that you have gotten this far, you need to contact the three major credit reporting bureaus, Experian, Equifax and TransUnion, to open a business credit file. Then look for a few creditors/suppliers that will start you off with a reasonable credit line. Then open a few credit cards in the name of your company that are for business use only. Make sure these creditors report to the major bureaus in order to establish a business credit history. Now monitor your business by obtaining a free credit report on a regular basis.