The Startup Magazine How Startup Owners Establish Credit

Are you frustrated by the fact that as a startup owner, it’s tough to establish commercial credit? Unfortunately, a large percentage of independent owners of new companies discover that it can be a major challenge to put their company on the radar of major credit bureaus. Many businesses have a harder time building credit than individuals do. However, there are a few specific business credit tips entrepreneurs can take to establish credit for their startups.

The main thing to remember is that it takes patience, perseverance, and a detailed plan of attack to get the job done. Everything begins with vendor relationships, which can be the key to putting your organization on the financial map. Other pieces of the puzzle include getting a college degree, setting up bank accounts in the company’s name, paying all business-related bills on time, and applying for a secured line of credit from a traditional financial institution. First, speak with current vendors and try to arrange a very small credit account with them. Here are the relevant details.

Leverage Vendor Relationships

Speak with one or two of your regular vendors and ask them to offer you a small line of credit. Of course, you’ll need at least several months of on-time payment before making such a request. Many vendors will happily agree to give you a minimum line for regular purchases. Be certain to take advantage of all early pay discounts and to settle all bills early or on time each month. It’s also important to remind vendors to report the arrangement to at least two of the major credit bureaus.

Earn and Finance a College Degree

Having a four-year degree is an indirect way to build creditworthiness. That’s because banks and other lenders view college grads as being more financially stable and are more apt to lend to owners who have academic credentials. However, even if you attend an online college program while working, covering tuition and fees can be quite a challenge. Fortunately, entrepreneurs can uncover plenty of financial opportunities by working with companies like Going Merry scholarships for college to cover at least a portion of their total educational expenses. The main advantage of scholarships is they need never be repaid, unlike school loans. Going Merry helps match applicants with multiple opportunities geared to each student’s needs and specialties.

Bank Accounts & Bill Payment

The implications of a business credit score are layered. Two essential pieces of the creditworthiness puzzle are related to company bank accounts and paying monthly bills. Owners who want to establish excellent scores with bureaus should pay all obligations a few days before due dates. Likewise, it’s imperative to open two bank accounts in the company’s name. One should be a standard commercial checking account and the other for savings.

Apply for a Secured Commercial Card

Speak with a local bank, preferably the one where you have your accounts, and ask for a secured card in the name of your business. Any limit is acceptable. Use the card for regular purchases and figure out how to pay your bills the right way, try to pay the balance in full each month. After six months of timely payment, ask for a higher limit and request that the bank report to at least one of the major bureaus.