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The business credit system is extremely useful for new entrepreneurs as it is absolutely necessary for almost any kind of loan, from big standardized bank loans to even most P2P loans. It is essential, therefore, that you know how to both build and apply business card credit so as to better serve your business as its needs and the needs of your clients grow.
Getting into the system requires having your business on file with Dun & Bradstreet, Experian or one of the other business credit reporting agencies. To do this, you will first need to either incorporate or form an LLC (talk with your lawyer or business associates to decide which of these options is better for you. You then have to register with an EIN, start some accounts in the business’ name, and begin some trade lines. Merchant trade lines are typically the first variables in the business system to apply business card credit to your credit profile.
When you have the business’ name in the system, then you should start applying for a business credit cards. Make sure when doing this that the credit cards you are applying for are not in any way linked to your personal credit profile; although it may more easily help you secure a credit card, this is not the area where you want to apply business card credit as it can actually do more harm than good to your personal credit score. Business card credit builds very quickly, but unfortunately can only take you to a certain point. Unlike personal credit, business credit is not as exclusively based on the timeliness of your payments, but rather the profitability and stability of your industry.