How can I improve my business credit rating?

I'm looking to start a business. R&D is going to take 12-18 months at which point we'll decide if we want to look for funding.

Given the possibility of asking the bank for the loan in the future, I was thinking of incorporating now. Securing a corporate credit card with some assets and building a credit rating for this new corporation in the mean time. Does anyone have any experience with this? Would the bank care?

2 Answers

  • 1 decade ago
    Favorite Answer

    Business credit isn't like personal credit. We use Dun and Bradstreet to check on the credit of people we might sell to. My company has no debt at all we own all our assets so our credit is simply accounts payable. We don't need to build credit like a human buying things on credit, we don't even have a company credit card. If we should need a loan sometime we would take a copy of an audited financial statement to the bank if they required it.

    When we work on a ship we need to know the value of the ship and how much debt it has. Dun and Bradstreet will have all that and if the company and ship aren't in good shape we would require cash in advance and the balance paid before departure.

    Small businesses use the credit of the owner since the owner signs personal responsibility for all loans.

  • Anonymous
    1 decade ago

    A true business credit card is a line of credit that is taken in the name of the business, under the business' credit. Activity, whether good or bad, is reflected on your business' credit report through D&B and other financial institutions, and the liability for any debts incurred and bills owed is with the business.However, some companies out there offer "business" credit cards which they require a person guarantee for. These institutions will often ask for a personal guarantee, and will almost always ask for a social security number from the person applying for the card. If this is the case, the credit card is not a business credit card, but is simply a personal credit card which is used for the business. The business is not liable for bills and debts - you are.When applying for a credit card for your business, watch out for areas asking for your SSN (and not your TaxID or EIN) and be wary of any credit card that asks for a personal guarantee. By ensuring that your credit card is in the name of your business, you can help to build your business' credit, while avoiding creating problems with your own.

    Many companies offer a list of credit cards that are issued under the business name only. Those lists typically run $300-$900, depending on the quality of the information inquiring. I would suggest starting your search online via google or yahoo. Search for "strong business credit" (just like that in quotes) to find services that sell the information.

    Good luck,

    Ilya Bodner

    Small Business Owner

    Initial Underwriting Group

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