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How to Establish Business Credit Without
a Personal Credit Check
Starting up a business is full of adventure and excitement,
until you realize your personal assets might be on the line.
Smart business owners are able to distinguish their personal
credit from their business credit. It may take your business
a little longer to get off the ground, but you'll have a
stronger business in the long run.
- Separate your personal
credit from your business credit. This protects your personal
finances if the business fails, but it also protects the
business just in case there are problems with your personal
credit. Incorporate your business or form an LLC to establish
business credit without a personal credit check. Sole
proprietors and partnerships by definition are personally
liable for the business, so you'll want to steer clear of
those options.
- Establish business identity. You need a
Federal EIN for your business as well as separate bank
accounts that are under the legal name of your business. Make
sure you have all necessary licenses and permits and designate
a separate phone line solely for your business. All these
things give your business more clout when creditors are
reviewing your business potential.
- Open business credit
files with the credit reporting agencies that are designed for
businesses. Dun & Bradstreet, Experian and Business Credit USA
report on business credit in ways similar to how companies
track your personal credit. Once you have credit established
for your business, you can report your payment history to
these agencies to build your credit score.
- Obtain business credit cards that are not personally linked to
you. You might also contact a few vendors and suppliers and
ask them to extend a small amount of credit to your business.
Pay your bills on time and you'll soon have solid
relationships with these partners.
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