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Building up a small business often requires lots of capital, and obtaining that capital is much easier when your business has a good credit history. But how do you create a good business credit file if your personal credit is a mess? Here are three important steps that can help you overcome that bad credit hurdle.

1. Create a Business Credit Profile
First, separate your business and personal affairs legally turning your business into a corporation or a limited liability company (LLC). This will legally keep your personal credit and assets safe from business transactions and it will allow your business to start building credit on its own. Start by obtaining an EIN from the IRS and a Dun & Bradstreet business credit profile number.

2. Use Trade Credit
A common form of financing in the business world is trade credit, which is credit extended from one business to another. This can help you build up your company credit score if you repay your bills on time and ask the vendor to report your payments to the Dun & Bradstreet business credit agency.

3. Clean Up Your Personal Credit
Getting back in control of your personal finances will ultimately have a positive effect on your business credit. When you are applying for small business loans, most lenders will want to look at your personal credit. It is a measure of your credit worthiness to repay that loan and most lenders will want to see a FICO score above 650. In order to clean up your personal credit, it is essential to start paying bills on time and pay down large debts as quickly as possible. In the meantime, you can try to access financing from peer-to-peer and alternative lenders.

After following these steps, lenders will start to see you as a better credit risk and you should be able to secure business financing for your growing firm.


Search for Small Business Loan Sources and receive your matched lender list
AND received FOUR free Business eBooks worth $39.95!
Search for Small Business Loan Sources