How to build business credit reddit

If I want to start and LLC or corporation not tied to me in any way.

Between big data and corporate filings, it's usually not a challenge to find out who is behind a corporation.

won't this then tie my personal identity/social security number to the business which is what you don't want happening?

This is... not a thing, unless the company is into something shady.

Ignoring corporate formalities is what shouldn't happen. Treating the business as an extension of one's personal capacity (e.g. using business cards for personal purposes) is what shouldn't happen.

Providing one's SSN/name in connection with a business credit application so the creditor can review personal credit is not a huge deal. Providing that info in connection with a bank account is even required by regulation. The account remains in the name of and under the control of the business, and that's what matters.

How would I go about building good credit for the business?

Find B2B suppliers who offer net 30 terms (e.g. Quill and Uline who will usually give credit to anybody), apply for small business credit cards that report to business credit bureaus.

Hi Everyone -

Quick background on me. I’m 26, work in marketing, and have a vantage personal credit score of ~780. I have 2 credit cards, with a $8,000 max each, that almost never leave a monthly balance on and a car note of $25,000.

Over the last 2 months I wanted to get my feet wet in the peer to peer car lending space. Long story short, I purchased a vehicle with cash for $7,200. Over the last 2 months I’ve grossed a little over $2,000, and have taken the time to learn the business fairly well. I know I can strategically scale this and cash flow around $1,500 dollars a month in my market with 2 used vehicles for ~$35,000 total.

Ultimately my goal is to separate my personal and business finances. I’ve created an LLC for my 1 car fleet, and I’m now trying to figure out how to establish some business credit so I can start to scale this side hustle. I’m extra motivated to do this through a business rather than through my personal credit because I’m also trying to purchase a home and maintain my solid personal credit score.

Any suggestions or tips?

You can start building business credit separate from your personal credit now. It doesn't take years, but it does require patience and following a specific process.

You'll need to make sure your business is set up correctly. There are about 17 or so data points to check off.

Then, you'd start setting up vendor accounts that grant you credit immediately based on net terms. That means you buy something, they invoice you, and you pay them in 30 days or whatever the agreement is.

You'll eventually get to revolving credit/credit cards, then you should be able to get a bank loan.

A good business credit score is between 80 and 100.

For anyone new to this:

To keep personal finances separate from business finances (and to avoid personal liability), most businesses aim to build business credit that doesn't require a personal guaranty. While this process can take as long as 1 to 2 years for a brand new business, it is definitely worth it in the long run if a business ever wants to be approved for a large credit purchase (such as inventory or machinery) or a bank loan down the line.

Explained in 6 parts:

1 - As soon as you have established your business, make sure to have a web presence (website, social media, yellow pages, etc.) whether you identify as a freelancer, sole proprietor, cottage industry, LLC or corporation, etc.. This is crucial, as when a new business is considered for a small line of credit, a web presence shows you have a reputation. Also go online to Dun & Bradstreet (https://fedgov.dnb.com/webform) and sign up for a Dun # - you will be required to enter this on business credit applications. Your Dun report is also public information that can be seen by potential creditors - so keep all information on it up to date. Getting a number is free. You can request this online (your new number will be emailed back to you in 1-3 days) by phone (don't let customer service try to sell you anything) or by mail.

2 - Currently, there only seems to be about 3 companies that will extend a small line of credit to NEW businesses after the first purchase or 2 WITHOUT having to give a personal guarantee AND will report your purchases and payments on your business credit reports. They are:

• Quill.com

• Theagencysouthwest.com

• Uline.com

• • @kodiakinc in the comments below mentions Grainger.com offering $1000 credit line to new businesses. I've never used them myself, but it wouldn't hurt to try it. Make sure they report business credit lines.

All three of the above companies will report your spending and payments on your business credit reports - Dun & Bradstreet, Corporate Experian, and Small Business Equifax. When your first account reports your "tradeline" to Dun and Bradstreet, the Duns system will automatically activate your file if it isn't already. This is also true for Corporate Experian and Small Business Equifax. Make sure to use the accounts monthly, as you want an extensive history to show on your business reports. It usually takes about 3 months for your new credit line to show up on your business credit reports.

3 - For the next year, consistently make purchases and pay them off. Also keep your business credit report free from any negative public information such as late payments, bankruptcy, and liens - remember, all that information can be seen publicly on your business reports.

4 - If you can spare it, also open a business CD at the bank where you keep a business bank account. Avoid any overdrafts on your business bank account as well.

5 - After a year, most businesses should be able to show:

 - A positive years worth of credit history
 - A positive years worth of business banking transactions/history.
 - A tax return/ balance sheet, etc. showing growth (if your business is having issues, you may have to wait an additional year)

6 - Finally, you should be able to take all of this information to the bank you do your business banking with. You can also meet with bankers at credit unions and other places where businesses loans are made to gauge how much you can be approved for.

This is also a good time to get inventory credit (if needed) from businesses that supply in bulk or sell large machinery. While many companies that extend this type of credit don't report your payment history on your business credit report, they will supply a letter of reference when you are getting bank loans or other lines of credit, which is invaluable.

Every year to 2 years, rinse, wash, repeat. This is how the average business owner that doesn't have lots of cash or a dying rich uncle navigates the world of credit.

*Edited to add: If your organization is located outside the United States, you can register for a DUNS number online. To register with D&B, you are not required to obtain a federal Tax Identification Number (TIN), also known as an Employer Identification Number (EIN). When registering, simply leave the TIN/EIN information blank. However, anyone doing business , especially with the federal government, needs to obtain a TIN/EIN in order to meet Internal Revenue Service (IRS) tax reporting requirements.

Hope this helps!