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If you’ve never owned and operated a business before, you’ll find that establishing a basis for credit relies on both the amount of money you can come up with, as well as your personal credit score and history. But more and more lenders are also using business credit as a way to determine the extent of the line of credit they’re willing to offer. And while this might not help new businesses in the beginning, over time you need to think about how to appropriately build credit in your business’s name, rather than your own, as a means of gaining access to needed funds, credit cards, and so on. Here are just a few tips to help you establish and build credit on behalf of your business.

1. Create a business entity. The place to begin when it comes to establishing a separate credit identity for your business is by taking it out of your personal name. This means setting up a business name and a dedicated phone line, at the very least, as well as creating an LLC or some type of corporation. This will establish your business as its own entity, after which you can begin to build credit in your business name.
2. Create dedicated business accounts. As long as business funds are being funneled through your personal accounts, it’s going to be difficult for creditors to separate the income and expenses that are personal from those that are professional. But once you’ve set up an independent company, you can create bank accounts, credit cards, and other lines of credit under the legal name of your business. And these accounts will help you to establish and build credit for your business, rather than affecting your personal credit.
3. Work with businesses that report to credit agencies. You have many options when it comes to vendors, creditors, and so on. And you’ll need to do some comparison shopping before you decide whom to spend your money with. You want to go for vendors, service providers, lenders, and creditors that report to proper agencies (i.e. those that help to establish credit ratings). This will ensure that your good behavior, in terms of using your credit wisely, is reflected in your business credit score.
4. Pay in a timely manner. Just like your personal credit, your business credit may be positively or negatively impacted by your actions. So if you’re trying to establish business credit or build up your current credit score, you cannot afford late or missed payments and the black marks that result. Even if you can only pay the minimum to creditors, make sure you pay every month and do so in a timely manner.
5. Check your credit report regularly. Whether you’re paying off a bank loan, you owe money to vendors, or you use a small business credit card, it’s important that you stay up-to-date with your credit report to ensure that your creditors are reporting regularly, that you don’t have any black marks, and that your efforts to build credit for your business are paying off with an increasing score.