A business credit file allows credit reporting bureaus to record and track your company’s payment history in order to build business credit over time. Having a business credit file may seem like a small matter, but it’s essential if you want to pursue business financing in the future. Read on to learn how to create business credit files for the major business credit reporting bureaus.
Step 1: Check if You Already Have a Business Credit File
Business credit bureaus collect information from third-party companies, business lenders, public filings, directories and other methods. As such, you may already have a business credit file with one or more of the major business credit bureaus — including Dun & Bradstreet, Equifax Small Business and Experian Business — without realizing it or opening one yourself. Rather than create a duplicate credit file, it’s a good idea to make sure that you don’t already have one with each of the major business credit reporting bureaus.
If you find that you do have a business credit file with any business credit bureau, it’s a good idea to order your full report. This will allow you to view all the data reported on behalf of your company. You should also make sure that your business’s details are accurate. Make note of any discrepancies and notify the specific business credit bureau, if applicable.
Step 2: Ensure That Your Company Structure Is Eligible
If you operate a sole proprietorship, you typically won’t be able to legally separate your business finances from personal expenses as they are considered one in the same. In order to open a business credit file, you’d need to establish a corporation, LLC or LLP.
Step 3: Apply for a Federal Tax ID Number
A federal tax ID, also known as an employer identification number (EIN), is similar to a Social Security number but is used for business purposes. It’s required to open a business credit file, in addition to filing taxes, hiring and paying employees, and applying for certain types of business permits. If you don’t already have a federal tax ID, you can apply for one through this IRS tool.
Step 4: Apply for a D-U-N-S Number
If you’re sure that you don’t have a credit file with Dun & Bradstreet, you can apply for a D-U-N-S number in order to establish your credit file with that specific bureau. A D-U-N-S number is typically required if you wish to pursue federal grants.
Step 5: Work With Companies That Report to Credit Bureaus
With the exception of Dun & Bradstreet, business credit files are typically created when business credit bureaus receive your company’s payment data from other businesses. In order to build your business credit, it’s important to work with companies that send payment data to one or more business credit bureaus. If you have a good relationship with another company with which you regularly work, you may want to consider asking them to report your payment data to one or more business credit bureaus.