How long does it take to build business credit? It varies but typically takes at least a couple of months. Building business credit is important for every company and has various benefits associated. You can minimize the time it takes to establish and build business credit by avoiding a few common pitfalls and being proactive about your approach.
Minimizing how long it takes to build business credit
Building business credit begins with starting the business credit reporting process, which requires establishing a legal identity for your company. The first step is to cooperate with the IRS and acquire a federal taxation number called an Employer Identification Number (EIN). You can think of an EIN as a Social Security Number for your company. It is best to establish your company as an S or C Corporation or a limited liability company (LLC).
You can get an EIN online by visiting the IRS here
You'll also want to obtain a Data Universal Numbering System (DUNS) number ASAP. These 9-digit numbers are assigned to individual small businesses by the credit reporting agency, Dun & Bradstreet. They serve as starting points for establishing business credit histories. Future data about your company will be attached to your DUNS number and potential creditors will review it to make their lending decisions.
You can get a DUNS number for free by visiting Dun & Bradstreet here
Establishing a business credit score
Once you have EIN and DUNS numbers, Dun & Bradstreet will begin a dollar-weighted numerical indicator to your company called a PAYDEX score. Note that your company cannot have a PAYDEX score without first having a DUNS number. The PAYDEX score indicates how well your business has paid its bills in the past.
PAYDEX scores range between 1 and 100. Higher scores represent better payment histories. So, 100 is the best and 1 is the worst. A company's PAYDEX is based on Trade References, which are records of payment experiences that vendors, suppliers, landlords, insurance companies, and customers report to Dun & Bradstreet.
So, how long does it take to build business credit? As you maintain relationships with different creditors, you will need to make every payment on time or ahead of schedule. You will also want to encourage your creditors to report pleasant payment experiences with your company to Dun & Bradstreet and other business credit reporting agencies like Experian and Equifax. We can guide you through establishing credit as quickly as possible in order to obtain business funding. Business Credit Advisors
helps entrepreneurs to obtain business credit lines and loans that are not linked to personal social security numbers. No personal credit checks. No collateral needed. Call or email us today and let us help you get approved for the business credit you need. Sources IRS Credit Karma Dun & Bradstreet Experian - Credit Industry; A Guide to Building Smart Business Credit