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Building Personal and Business Credit

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Building Personal and Business Credit

Published: October 13, 2009

The NYS SBDC Central office has been getting an inordinate number of pre-recorded phone calls lately. Many of them are apparently random-number generated and have messages that start: 'We're pleased to let you know that you are eligible for our debt reduction service...' Quoting Simon & Garfunkel: 'And blah, blah, blah.'

Since someone has recently asked us about how to build their credit, here are some do's and don'ts.

DO establish credit by getting at least one credit card.

DO choose a credit card wisely.

DON'T, if you do get into credit difficulty, hide the overdue bills in a drawer, but rather talk with your creditors.

DO get your credit report. You can get it for free.

DO dispute credit report errors - yes, they do make mistakes, especially if your name is common.

DON'T believe claims such as 'We can erase your bad credit — 100% guaranteed'.

DON'T try to hide unfavorable credit information by establishing a new credit identity, unless you are a big fan of hefty fines and prison terms.

NOW, when it comes to building BUSINESS credit, do all of the above for your PERSONAL credit, plus establish credit SEPARATE from the individual by treating business separate from oneself by:
# getting an EIN - you can do it online with the IRS
# setting up a recognized structure such as an LLC or S-Corp
# having a separate phone number (make sure it's listed!), bank account, credit card
# setting up some net 15 or net 30 accounts with your primary vendors and paying them AND the credit card off promptly
# getting a D&B D-U-N-S® Number *

There are lots of companies who will offer to sell you ways to get business credit; some of them will be telling you, or doing for you, some of these same steps. A couple recommended free guidelines from can be found here * and here. *

*Please note: these are non-governmental sites.

Message Edited by StuartR on 10-14-2009 04:08 PM
Message Edited by nyssbdcrn on 10-15-2009 02:01 PM

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This was a very helpful and informative article. After reading it, I immediately went and got the latest copy of my credit report, for free. Thanks for that resource.
This was a very helpful and informative article. After reading it, I immediately went and got the latest copy of my credit report, for free. Thanks for that resource. It was helpful because I found out some things I needed to take care of. I also obtained a D&B D0U-N-S no. D&B also offers a free business listing, which I also created a couple weeks ago. My business is an LLC, has its own EIN, and it's own phone. I will check out the resources you posted on getting business credit. Thanks, Eric Bryant, DirectorGnosis Arts
I have seen several posts about getting a D&B number, and that is a good idea, but there are other commercial credit reporting agencies out there. As a new small business you are trying to get your credit established and grow your business. But are you going to extend credit as part of your business model? If so, you can’t afford to go out and sign a credit reporting contract that costs hundreds of dollars on a single credit report. Even large corporations can’t afford to do that on a regular basis.  Keep in mind it is a good practice for you to run a credit report and have some type of credit application before you extend credit to your new customer as you grow your business. Just keep in mind there are several credit reporting agencies that may have a better product and better pricing. You may hesitate to spend over a hundred dollars on a credit report, but if the credit report were in the range of ten dollars and had more trade lines it would save you money in the long run.

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