small-business-marketing

Entrepreneurs often rely upon their personal credit to start a new business. Sometimes that's a necessary step, although it's also extremely risky.

You can't, however, build a successful business entirely on personal credit. Instead, you need to establish and build a separate business credit profile. Think of it as taking the training wheels off your new business - it's a big step, but you'll go a lot faster and further in the long run.

Let's look at five steps you can take to start building your business credit profile today:

1. Get a DUNS Number. Dun & Bradstreet issues these numbers, which are the most widely used method of identifying businesses in the United States. Most corporate credit applications require a DUNS number - and it's up to you to get a number for your new business.

2. Consider a corporation or LLC. It's not impossible to get business credit as a sole proprietorship, but it's much more difficult to separate your personal and business credit.

3. Pay attention to the details. Prepare financial statements and a business plan, both of which are important to getting business credit. Also stay current with business licenses, permits, and other regulatory requirements - companies often check these details when they perform a corporate credit analysis.

4. Look for sources of "starter" credit. Some companies will grant credit without checking your personal credit history. But remember: This is only useful if the company reports your good payment history to the business credit bureaus, helping you to establish a solid credit profile.

5. Don't pay on time - pay early! Paying ahead of time can improve your business credit score even more than paying on time. It can also convince a business to extend credit or offer more liberal payment terms.

Once you start to build a business credit profile, don't forget to check your credit reports with all of the major reporting agencies. Errors and omissions could affect your credit risk score, so it's important to monitor your credit profile.