The
following article comes directly from www.entrepreneur.com and contains some very valuable information
regarding business credit. As an
entrepreneur, did you know you have a unique opportunity to build, maintain and acquire credit
both individually and as a business owner? That’s
good news if you’re trying to build and grow a
company because you won’t have to rely solely on
your personal credit to do that. As a
member of the business credit industry, it’s been
my experience that fewer than 10 percent of all entrepreneurs know about or truly understand how
business credit is established and tracked-and how
it affects their lives and businesses. So
let’s first take a look at how personal credit differs from
business credit. Then we’ll discuss some steps you
can take to build your business credit. At
the point an individual with a social security number
accepts their first job or applies for their first
credit card, a credit profile is started with the personal
credit reporting agencies. This profile, otherwise
known as a credit report, is added to with every
credit inquiry, credit application submitted, change
of address and job change. The
information is typically reported to the credit
bureaus by those who are issuing credit. Eventually,
the credit report becomes a statement of an
individual’s ability to pay back a debt. In
some cases, the same is true for businesses. When
a business issues another business credit, it’s
referred to as trade credit. Trade, or business, credit
is the single largest source of lending in the world. Information
about trade credit transactions is
gathered
by the business credit bureaus to create your
business credit report using your business name,
address and federal tax identification number (FIN),
also known as an employer identification number
(EIN), which you get from the IRS. The business credit bureaus use this compiled data
to generate a report about your company’s business
credit transactions. In many cases, those issuing
credit to you will rely on your business credit
report to determine if they want to grant you credit
and how much credit they’ll give. The
major business credit bureaus that compile and
provide copies of the reports are:
•
Experian Business
•
Equifax Business
•
Business Credit USA
Unfortunately,
because the information provided to the
business credit bureaus is sent in voluntarily-- no business
is required to send it in--the credit bureaus may
never receive all or even any information about
your business credit transactions. In fact, you could
go for years racking up business credit without any
of it being reported to the credit bureaus.
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