What is business credit?
Business credit provides Banks, Lenders, Creditors, Vendors and Suppliers with the information they need to determine whether or not they want to do business with your company. A business credit score will demonstrate how you have paid your credit obligations and if you are a good credit risk. A business credit report contains important information about your company such as how long you’ve been in business; who the principals are, revenues, business type, size and location; and any legal filings such as tax liens, judgments or bankruptcies.
Why is business credit important?
Business credit can be one of the most important things your new or existing business can have.
- It can help grow your business providing you with access to the cash and/or resources you need today or in the future.
- Business credit can also insulate you from personal liability in the event your business should ever get in trouble. Because your business credit is not tied to you personally through your Social Security Number, your business, in most cases, is solely liable for its financial responsibilities.
- It isn’t unusual for customers and prospects, including potential investors, to inspect your business credit to assess the financial stability of your company. Poor business, or no business credit at all, could make your business look like a risky endeavor.
How is business credit different than personal credit?
Business credit and personal credit are not related and are not reported together. Business credit is your company’s history of paying its financial obligations and is based on credit history established under the business’ tax ID number (Employer Identification Number-EIN), NOT the business owner’s Social Security Number. Think of your EIN as the Social Security Number for your business. It’s essential to keep your personal credit and your business credit completely separate. Continuing to fund a business through personal credit cards, loans or lines of credit could put you at financial risk if the business happens to get in trouble.
How is business credit used?
When your company applies for a business loan, credit card or line of credit, the creditor will check one or more of your business credit reports and their associated scores. A creditor can be a supplier (like an office supply company) or a lender (like a bank, credit union or credit card company). There are a variety of “business credit bureaus” that collect and manage information about your company. D&B, Equifax, Experian, and Ansonia Credit are examples of some of the more well-known repositories of business credit information.
What kind of information is contained in a business credit Report?
Your business credit report(s) contains information such as:
- How long you have been in business
- How many locations you have
- Principals of the company
- Company revenues
- How many employees you have
- The industry you operate in
- How you pay your “trade credit” accounts
Reporting to a business credit bureau is optional, so you may find that a few suppliers do not business credit information.
How can eCredable help me build a business credit score?
Most companies do not report your monthly payments for business phone, internet and utilities to the business credit bureaus, so you don’t get credit for paying these bills on time. eCredable allows you to report your payments for business phone, internet and utilities to one or more of the business credit bureaus to be included in your business credit report(s) which can help you build your business score(s).
Many computer companies or office supply companies will extend credit terms to you and then report your monthly payment to the business credit bureaus. Make sure you set up accounts in the name of the business. Opening an account in your personal name and social security number will not help you build a business credit score. This could severely harm your personal credit score if your business is not able to make timely payments. It also does nothing to protect your personal assets in the event of an issue with your business.
Building business credit is an important step for any small business. eCredable Small Business can help you build business credit by reporting your business phone, internet and utility payments to Creditsafe and Ansonia. Here’s how you can start:
- Incorporate your company to ensure it’s seen as a separate business entity
- Obtain a federal Employer Identification Number
- Open business bank accounts in your business name
- Set up a dedicated business phone line in your business name and make sure it's listed
- Report your business phone, internet and utility payments to Creditsafe and Ansonia using eCredable Small Business
- Establish a line of credit with vendors or suppliers
- Apply for a business credit card or loan
- Pay your bills on time
Once you have established and built good business credit, be sure to monitor and protect it.
Which Business Credit Bureaus does eCredable report to?
eCredable currently reports Dun & Bradstreet (D&B), Equifax, Creditsafe, and Ansonia. For D&B, eCredable only reports your eCredable Business Subscription payment at this time. We can report to participating business credit bureaus simultaneously, most any utility, vendor, or supplier account that you have a contractual agreement with to pay on a monthly, quarterly, or semi-annual basis. There are two ways eCredable collects and reports your account information and payment history to our participating business credit bureaus:
- The first option is to link your accounts to eCredable. The eligible business utility account types that can be linked include Power, Gas, Water, Waste, Mobile Phone, Cable TV, Satellite TV, Internet, and Landline Phone. We connect to over 2000 utility companies across the U.S. To see the full list of utility companies eCredable reports to Equifax, Creditsafe, and Ansonia, click here: Utility Company Search
- The second option is for an account you’re unable to link, including certain vendors, suppliers, office rent, business insurance, various business services, office furniture/equipment leases, and legal services. You can add these types of accounts to eCredable manually and request them to be verified by eCredable to be reported to Equifax, Creditsafe, and Ansonia on-demand, click here: On-Demand Account Verification
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