Nevada State Corporate Network, Inc.

The first step a business owner must take in order to establish business credit is to incorporate their business. After their business has been set up as a separate legal entity, the next step is to bring that entity into a compliant status. There are several steps involved in this one particular step. Our business credit coaches will cover this in detail with you. The purpose of this article is not to outline each individual point of compliance; rather its purpose is to illustrate the importance of this step in the process of building business credit.

Many people come to us, anxious to begin the process of building business credit; however, many people think that just having an entity in place makes them eligible to start opening up trade and vendor lines of credit and building business credit. Unfortunately, this is not the case. Every business, whether brand new or 10 years old must go through a compliance check by a business credit coach in order to successfully build business credit.

I have found that the most helpful thing to do in order to illustrate the importance of compliance is to ask our clients to place themselves in the position of the lender. If you were extending credit or lending money to ABC, LLC what kinds of things would you expect the business to have in place? Obviously, you want to feel comfortable before lending money to this business. Each client that we speak with will have various items that they will list in response to this question. Well, in response to same question, the lenders and credit bureaus have gotten together to create their own set of standards.

Some things are obvious, for instance having your legal business entity current with the Secretary of State’s office. There are many other things that are not so obvious. It takes a trained expert like the professional business credit coaches in our FastTrackCredit program to assist clients in the finer points of compliance.

It seems extreme, but having even one thing out of place, can ruin your chances of building credit for your business. This is known as being “red-flagged”. Red flagging is something done by the business credit bureaus such as Dun & Bradstreet. When a business is red flagged it means that it is permanently disqualified from building business credit. Not only will the present business be disqualified, any other business you are associated with can also be red flagged.

The process of building business credit is something that should be exciting, but it is also something that requires caution. Lenders and creditors have approximately 2,000 points of criteria that must be met before extending credit to a business. In order to build business credit properly and not have any red flag issues, we must begin with a strong, solid foundation. Please contact us today so that we can assist you in successfully building A Plus credit for your business