How Do You Establish Business Credit?

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A business can establish credit by applying for a tax identification number, opening a business bank account, obtaining a DUNS Number and securing credit terms from suppliers, according to the U.S. Small Business Administration. Building on relationships with suppliers is the easiest way to establish a business credit history.

A new businesses obtains a tax identification number, also called an employer identification number, from the Internal Revenue Service. The number enables the business to establish its own financial identify, instead of operating under the social security number and personal financial auspices of an owner, explains the SBA. For example, a tax identification number enables an entrepreneur to open a business bank account under the name of the company.

The next step in establishing business credit is to register the business with Dun & Bradstreet to obtain a DUNS number. Dun & Bradstreet calculates a Paydex Score for businesses that reflects payment history on accounts opened under business-based taxpayer identification numbers. Applying for a DUNS number is a simple online process, notes the SBA.

With a TIN, business bank account and DUNS number, establishing business credit is a matter of opening basic credit accounts, according to Entrepreneur magazine. Typically, the bank the business uses has credit products for start-ups that include lines of credit, small-business loans and business credit cards. Banks sometimes want the business owner to use personal credit to guarantee repayment by the business. However, the suppliers that sell the start-up its inventory and equipment tend to offer finance options, lines of credit and payment terms that help establish an initial credit history more easily.