The Right and Wrong Way to Get Business Credit Tradelines
Understanding Business Credit Reporting
There are various myths about establishing company credit. To begin with, an EIN does not establish a corporate credit profile. You must verify and register your information with all three commercial credit bureaus. To have a credit profile, you must also have reporting accounts.
Another common myth is that making payments automatically results in a good credit score. The majority of business payments are unrelated to credit accounts. 97% of accounts do not report to credit bureaus.
Most new business owners believe they should apply for additional accounts as soon as they are accepted for their first. However, to acquire better account alternatives, better terms, and easier qualifications, you should wait for accounts to report before moving on to the next credit tier.
Good Paydex and credit ratings do not ensure lender approval. Scores are less essential than depth. Scores simply tell a lender whether to evaluate your credit.
Business credit is not developed in the same manner as personal credit. Secured cards are far less effective than gaining fast access to credit lines. Vehicle finance is only accessible after you have established your credit; there are no starter vehicle financing choices available.
Business credit offers additional advantages than simply establishing net vendor credit lines. You can acquire access to thousands of dollars in credit with business credit through revolving vendor accounts, business credit cards, vehicle finance, bank loans, and lines of credit. There is net, revolving, and payment options available.
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