Building a good business credit rating is as important as having a good personal FICO score. Just as it is difficult to obtain personal loans or mortgages if your FICO score is less than 620, obtaining business financing is also difficult without a PayDex score of at least 70. A company might be able to convince the lenders to provide finance for a business proposal based on a good FICO score but the exorbitant rate of interest charged may completely upset the viability of the project. Moreover, the owners would have to make a personal guarantee each time they took a loan out for the business. Another important aspect of financing is never to make multiple applications for loans.

This jeopardizes a person's personal and business credit rating. Steps towards Building Business Credit The process of building up a business credit rating cannot be achieved in one day. It needs detailed planning and a sustained and determined effort to lift the rating to a level that will make it easy to get business financing. Below is a list of the various steps that need to be taken care. 1.The business must be a legal entity.

2.The name of the business, its address, phone numbers, and tax ID number must be provided to all the agencies and trade credit vendors in the same fashion. 3.There should be a physical location for the business.

4.The telephone and fax line numbers must be listed under an exact business legal name with the directory assistance services. 5.The business should have an email address and its own website with a business domain name. 6.

Obtain a proper business license and tax resale license. 7.Maintain financial statements for at least two years. 8.Obtain both Federal and state business tax ID numbers, keeping the same legal business name. 9.

Earn a proper bank rating as part of a bank reference. 10.Get a Dun and Bradstreet number so credit feedbacks can feed into it, building up the credit rating.

11. Be certain trade references are regularly sent to the credit reporting agencies indicating that your business has made its payment obligations on time. Favorable Trade References The ultimate aim of these steps is to ensure the company achieves a minimum PayDex score of 70, preferably 75 or above. This can only be done if the company obtains at least five trade references, reporting to the D & B credit agency and giving favorable feedbacks regarding the payments to suppliers. This establishes a good credit history so that the business credit score gradually moves up.

There are software packages available to help in the endeavor of obtaining a good business credit score.

David Gass is President of Business Credit Services, Inc. His company publishes afree weekly e-newsletter on Small Business Consulting at their web site http://www.smallbusinessconsulting.com