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One of the best credit building tools that you will ever come across are credit cards; they are the basic building block of personal credit, and, despite common misconceptions, a very fundamental building block of business credit as well. If you have just registered your business and have established a credit profile, you will find an incredible amount of use for new small business credit cards.

How does business credit work? Business credit is credit that is based on the holdings, profitability and stability of a business entity such as an LLC or a C-corp. However, this does not mean that lending institutions don’t look past sound record sheets. Business credit does rely on the repayment of loans, and the easiest form of loans that new entrepreneurs often have access to are new small business credit cards. By allocating your major expenditures to these cards, you will have little difficulty building up the initial business credit that you need.

Building business credit is essential to getting bigger and better loans later on in your business career. A high Paydex score will mean a greater chance of getting a high limit loan for a low interest rate. While new small business credit cards are useful for building up initial credit, eventually the Paydex score is built around long term profitability and stability; however, it is very difficult to achieve these things without access to quality financing, and you will find it much easier to do this with some existing good credit.

So where to find the best new small business credit cards? The most important thing to consider is that the credit that is being used for the cards derives exclusively from your business credit and not your personal credit; in order to do this, you may need to apply for a secured business card your first time. This means that you will have to secure the credit card by maintaining a savings account with a designated amount of money in it. While this is not the most fun way to apply for a credit card, it is an excellent way to get your foot in the door to building good business credit.

This Business article was written by Mark Karavan on 2/10/2010