How long does it take to build business credit? - News-Credit-Mortgage-Coin


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Sunday, February 14, 2021

How long does it take to build business credit?

 Experts say it takes three years or more to build credit for your business. Here's how to get started


Experts say it can take three years or more to build up business credit, but some creditors may only take a year. If you're trying to build up credit for a new business, these steps can get you started.

Most business owners hate to hear this, but when it comes to building business credit, the race is slowly and steadily winning.

Nat Wasserstein, principal of Hudson Premier Payments, a payment processor in Nyack, NY, estimates that business credit can take three years or more to build.

"Usually loan applications say you should be in place for at least three years," says Wasserstein.

In some cases, it might only take creditors a year, he says, but that's not the norm.

"They want to see that you were there," says Wasserstein. “Once you have that, they want to see that there is nothing out of the ordinary. There are no judgments. You need to have enough time to determine if you want to provide credit to this company. "

So, start building your credit score

Your business credit profile is based on your track record of running your business finances, e.g. B. Your business account, all credit accounts that you open at merchants such as office supply stores or hardware stores, and all business credit cards opened by you that you take out.

Formalize your business

Every business owner should have a checking account with the company's name and tax number, separate from their personal account. This helps establish the business as a separate entity from you.

Be careful with your checking account

Make sure you have an adequate balance so you don't have overdrafts or bounce checks. It shows creditors that you are responsible for your finances.

Stay up to date on all of your bills

Wasserstein said many established providers report to Dun & Bradstreet and other credit bureaus. It is even possible for a provider such as your telephone company to report your payment patterns to credit bureaus. So stay tuned, he advises. Add reminders to your calendar to pay your bills so that you don't get stains on your radar screen for years to come.

When do you apply for a business credit card?

After repeated good financial behavior, you will improve your chances of successfully applying for a business credit card. A good point to try is the one year limit. At this point, loan issuers have a fair amount of activity by which to be assessed.

You can also check your business credit report to make sure your credit is in a good spot before you apply. Sometimes it can take a while for creditors to contact the credit bureaus. Credit card issuers will likely also check your personal balance. So make sure you want it there too before you apply.

If you've defaulted and paid some of your bills late - a common occurrence in new businesses with unstable cash flow - wait until you've had a perfect or near-perfect track record for 12 months.

Even though you can only get a credit card with a small credit limit like $ 1,000, be patient first. Rome wasn't built in a day, and neither is business credit.

As you pay that billing time every month, you build an increasingly strong credit profile. Just make sure you are not using all of your available credit. This leads to a high credit utilization that affects your business credit.

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