Establishing Business Credit – Tips for Success

Most of entrepreneurs and common people are well aware about personal credit cards and credit scores. You can use this credit card to borrow money. But there is a different concept of business credit cards. These cards provide several such advantages to entrepreneurs that they can’t get with personal credit cards. It helps the owner to keep his/her personal and business finances on separate level. This protects you from several nuisances of personal credit cards. If a problem arises for personal credit card, then it hinders new credit for business requirements.

Apart from that, business credit cards have better terms and conditions for companies everywhere either they provide PRO services in Dubai or business registration services in Mumbai. With strong business credit, you will be required to pay less after borrowing. This reduces your interest rates and other charges. Customers can also view your business credit as it is not confidential like personal credit scores. With good score, customers are more likely to place a big order for your services.

Following are few important tips that will assist you getting success with business credit.

Legal business entity

The primary and most basic step that you will be required to establish your business credit is by adopting a legal business entity. It is required because information related to your business’s payment history must be mentioned on your accounts.

In this case, your best option is choosing LLC (Limited Liability Company), S Corporation or C Corporation. It is because these structures can easily separate your business and personal finances. On the other hand, a partnership or sole proprietorshipsareconsidered the simplest types of organizations but they are not good for building your business credit.

It is because these company structures make almost no legal or financial separation between you and your industry. As this separation is most important for business credit, therefore it is better to avoid such corporatestructures. In the long run, they will create issues in getting bettercredit scores.

Separate business address and phone number

You can further strengthen separate existence of your corporate by adopting a dedicated business address and phone number. This small but important step will help you getting registration with business directories.

Business credit reporting agencies collect information from these directories while all big directories demand a proper business address and phone number. Therefore, it is extremely important to establish separate address and phone number for your corporate entity.

Business bank account

It is also one of the most important steps to separate your business and personal accounts. Now, several banks also offer free business checking accounts that is required for this purpose. Establishing this separate bank account will provide a bank reference to all the major credit reporting agencies (Equifax, TransUnion and Experian).

Apart from that, these bank accounts are also helpful in securing better credit accounts in future. This step should be completed as early as possible because most prominent small business lenders usually demand minimum 2 years old business bank accounts from borrowers.

Author Bio:

Mona is a content writer and consultant in a Dubai-based consultancy firm, Riz& Mona Consultancy. During her content writing career of over 6 years, she has acquired lot of experience in writing for various subjects related to business and investment. This includes business credit, small business, taxation, trade, finance, and others.

 

 

 

 

 

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