Many small businesses or startups, do not get loans at least once in the applications. It is not very common because your business does not have any or many previous records, or maybe you missed a step when you were establishing your business. When applying for credit you want to make sure that all your documents are in order and that you have done your due diligence in what may be required. Having strong business credit can be crucial for your business, and all this is possible, but where do you begin? Here are ways to build business credit for beginners.
Register your company
This is the first step in putting your business on the map. Once you incorporate your company, you have distanced it from your credit. Therefore, in case anything happens to your business, your organization will be dealt with as a different entity. Here, you will also get a business number, which is different from your identification number. This number will be required when filing tax returns, and most times for the identity of your business.
Get a Data Universal Number System
When thinking on how to build business credit fast for startups, you need to apply for a DUNS number. It is not mandatory by law. However, you need it to establish a credit file. Besides, you need this number to access government grants and loans for small businesses. This nine-digit number is what is used to track your D&B credit score by companies because it shows your business’s creditworthiness. The DUNS number also informs investors and other lenders whether your company is a high risk based on how prompt you have paid your previous creditors.
Open a bank account
Opening a bank account is not just essential for your books, but financial institutions will rely on the information from your business bank account. The bank account informs your lenders on the cash flow of your business, outstanding loans, and repayment or default records. So, your bank should be active, and you want to make sure to include all your transactions. Keep them as open as you can to have clear records. Plus, pay your suppliers and other lenders from your bank account as well. In the long run, it is easier to pull all this information out of the bank statement.
Establish your Business Profile
A business profile is where your investors, financial lenders, and suppliers come to know you. This is where your business creates the first impression. Also, the business profile is what will motivate other people to interact with your business. Ideally, it gives a brief introduction to your business. Pay attention to the creation of your business profile as it is an attraction for your customers, investors, as well as creditors. Besides, you want to make a good impression as other people make assumptions based on the information you will provide on here.
Importantly, remember that you are building your credibility. Therefore, avoid changing your name, address, or even your location regularly, and you also need to try and use the same suppliers after doing your research carefully. A long relationship with your suppliers or financiers tells a good story to companies or lenders that you may want to work with in the future. You can also ask them to report on the different creditor’s platforms.
Make payments on time
To build your business credit when you are beginning, you need to make your payments promptly because you are only making a name for your business. To gain trust from your suppliers, and financial institutions like banks, you have to keep your word and make your payment on or before the due date. This will help you in building your credit scores fast.
Update your information
When building your business credit, you want to make sure that all the available information is up to date. Since little inconsistency could cost you, your future investor, suppliers, or even lenders could go to your web page, and so you want to be sure what they see is ideal. Each time you change the number of employees, location, address, or suppliers, it is important to share this information.