Establishing business credit

[Eric Hubbard]

How would you process with establishing business credit for the purpose of obtaining capital via business lines of credit. Would you set your LLC with your home address or use a virtual address. I've done some research and some say use your home address so you company doesn't get red flagged due to the virtual address and others indicate lenders won't lend with a home address...Any thought?

[Albert Bui]

- below is not advice just what I've read up on and have acquired so far:

You'll need to register your entity to get a EIN# (employer identification number).

Open a checking account to pay from and transact from to create separation between personal and business expenses

Go get a Dun's # - Dun and Bradstreet - register your business - to get credit profile started

Establish trade lines (homedepot, chevron gas cards, and etc) which are the easiest to get at first then work up to revolving, installment, mortgage/real estate etc

Business credit is not scored based on your utilization rate of your credit accounts but rather only how quickly you pay the creditors so make sure you pay all your accounts before 30 days 

the scoring model uses a "paydex," score as opposed to a FICO score

The quicker you pay your creditors before the due date, the better your paydex score

Once your paydex score gets above 70 you'll  be in average bracket and good from when you reach 80-90, and 90-100 is excellent with 100 as best.

Once you reach a high score you'll have a lot better chance to get lines of credit, working capital, or other loans.

I hope that helps -