1. Take care of your personal credit first. It might seem strange, but personal credit can really help you build business credit faster. If you take care of your personal credit, the process of building your business credit will be easier.
2. Build credit and apply for credit before you need it. This is one mistake that many businesses make. They wait until they really need credit to worry
about getting credit. And guess when it is most difficult to get approved for
business credit? When you really need it! You need to think like the story of
Noah’s Ark… and start building your boat even though everything is sunny
and bright right now. Build business credit and apply for business credit
before you need it. Someday you’ll be glad you did!
3. Use the credit you do have. You can’t effectively build credit if you don’t use what credit you do have. Use your credit, and use it responsibly. This will mean making charges on any business credit cards, and paying them off in a timely manner. It will mean using vendor credit accounts from places like Quill to buy basic supplies each month, and paying those charges off early. Working in this way from the very start is the best way to build the best business credit profile for the long haul.
4. Build relationships with local banks, and diversify among lenders. There are two very important things that few businesses consider when building business credit: First, RELATIONSHIPS with local banks are extremely important. Second, the “banks” part should always be plural. Let us explain, building a relationship with a local bank is smart because many local banks aim to attract local businesses. They often have perks and products that other large banks won’t have. But the flip side of this is that local banks of all sizes (large and small) will change periodically. Their products will change, their policies will change, their loan terms will change, and when that change comes, it is important for you to have built other relationships with other banks… just in case you need them. One recommended strategy is to utilize different types of banks for different types of business accounts. You may have a business checking account at one bank, a business savings account at another, and you may have a small line of credit with yet another. Spreading out your business accounts like this can allow you to build valuable relationships with multiple banks, and will give you the best options when you eventually need a bank loan for your business.
5. Don’t forget that there are other options out there. When you are building business credit, and especially when you are shopping for larger loans, consider some of the viable alternatives: Prosper.com, Kickstarter.com, private lenders, investors, and more. How can these things help you “build” credit? For one, they will keep some credit off of your business credit report, and that can actually be good in some cases, especially when just starting out. Secondly they can be an alternative source of funds when the traditional sources are too slow or too limited. Thirdly, they can be a source of references when applying for bank loans or other larger credit sources in the future. In all of these cases, the key is really to take action and “do something” now. You’ve got to take care of your personal credit. You need to START NOW and build business credit. You need to — USE your business credit. You need to BUILD RELATIONSHIPS. You need to actively seek funding for your business. All of these steps ultimately boil down to one thing: ACTION! So take action, and take positive steps to build your business credit today.