Just as individuals need to have at least some basic creditworthiness in order to function well in the world today, businesses also need to have access to credit in order to grow and thrive. In many ways, business credit building is very similar to building a personal credit profile.

Business credit scoring works just the same way that personal credit scores work, and so one must also build business credit history starting slowly at first with small loan amounts. Done correctly and successfully, building business credit can lead to the ability to seek large amounts of capital for continuing to build and expand the business.

There are two primary reasons why people seek to build business credit. The first is to keep business and personal financial dealing separate and the second is to have access to the larger lines of credit that a successful business cans secure which are simply not available to individuals.

In order to truly separate your business finances from your personal finances, you will need to form a separate legal entity such as a corporation or a limited liability company (LLC) that can legally function separately from you and which can also apply for an EIN from the IRS, which is the equivalent of a social security number, but issued for businesses.

For those looking to build business credit fast, you can purchase a "shelf corporation" which is a corporation that has already been formed. The cost of a shelf corporation will vary from state to state, and will vary depending on how long ago the entity was formed and what additional support services the service company provides to your new corporation. While a shelf corporation will not have any kind of business credit history established, it does give the lenders the impression the the company has been around longer than last week when you filed the papers on a do-it-yourself incorporation.

While one of the advantages to business credit building is access to larger credit lines, the new business must start out with the basics of acquiring small lines of credit. One of the best places for a new small business to start is with gasoline companies and office supply chain stores which usually have some of the most lenient credit requirements available.

Business credit normally does have more categories than in personal finance and these typically fall into several areas such: banking, bank credit, trade credit, equipment leasing, credit cards, and financing of accounts receivable.

How to build business credit score from the starting point requires that the business maintains their checking accounts in good standing, pays their trade accounts on time, makes all loan and credit card payments in a timely manner, and keeps up with lease payments. Gradually, this building business credit history activity will allow the business owner to seek higher lines of credit.

However, the same principle of not becoming overextended apply to a business just as it does to an individual. Just because one can get more credit, does not mean that one should get more credit or use it all to the available limits. The purpose of business credit should be careful expansion, but going into debt unchecked will more than likely crush a new business rather than help it.

Business credit building can be a challenge, because you are now responsible for building and maintaining two different credit profiles, but it is also very rewarding as your business starts to take on a financial life of it's own that can provide you with a sense of accomplishment and additional financial options and security.

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