Columbus, OH (Akiit.com) – It’s been estimated that fewer then 10 percent of all entrepreneurs know about or truly understand how business credit works. So, lets first define what exactly business credit is.
Having business credit means that you have a line of credit (credit cards, loans, etc) seperate from your personal credit. This essentially means that if you take out a business loan, it will only show up your business credit report – not your personal. In fact, anything you do on your business credit will only affect your business.
So the question is how do you get business credit?
1) Repair your personal credit. Although they are separate, you likely will not be able to get a line of business credit, if your personal credit is bad. This is because initially this is all a banker has to go on.
2) Open a business banking account. Be sure to do this at the same bank where your personal bank account is. This will allow the banker to see that you are a good customer. Make sure to open the account in the name of your company with a business tax ID, and try to keep at least $1,500 in that account.
3) Approach your banker about business credit. After months have gone by with a business account at the bank, now you can ask your banker about giving you a line of business credit. You may only qualify for $300 or less, but take it.
4) Utilize your credit line. If you were approved for only $300, this is okay. Use it every month, and pay it back every month. Within 6-8 months, they will likely increase it to $600 or more. Repeat the process, and you will one day have access to thousands of dollars.
5) Pay your bills on time. Don’t mess up your business credit. You need to pay your bills on time. You can lose this line of credit, just as fast as you got it. Be responsible, and it will pay off in the long run.
Written By Dante Lee