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Are you thinking about applying for your first business credit card? You will find that the process is remarkably similar to personal credit cards; business credit cards are issued by the same principal credit card agencies (Visa, Mastercard, American Express, Discover). Business credit cards also have approximately the same interest rates and offer many of the same advantages, such as cashback rewards. However, there is a very key difference between the two forms of credit, and the difference has to do with the way the business credit is established.
When you first go to apply for a business credit profile, this is one of the more annoying things you will discover: business credit requires a rather lengthy set up. You must first set up a business entity, which is something that you can do with the aid of a legal professional. You will probably select either a Limited Liability Company or a C-corp as your business model. After this, you will have to send the information about the newly incorporated entity to the IRS so that you can get an Employer Identification Number (EIN). This process typically incorporates a number of fees and registration forms that you will have to fill out, and after that is done you will need to start a bank account and a phone line in the business’s name.
Now, you can finally start building business credit. Give Dun & Bradstreet a call and give them the information about your newly created business. They will start you in the world of business credit by developing credit profile for you which will immediately begin responding to your merchant and credit information. This can be greatly facilitated by purchasing a Discover business credit card; simply buy purchases with it and pay them off on time. Very quickly, you will begin developing a strong Paydex score.
Knowing how business credit works is the best step toward either fixing it, or developing a strong credit profile.