If you want to run your business smoothly and successfully, you must keep your personal credit separate from your corporate credit. The finances of your business depend upon an array of factors and some of these factors are out of your control, such as recession or any other sudden changes in market conditions. When personal credit is mixed up with business credit, the sudden unexpected changes on business front may affect your personal FICO score as well, which can be quite damaging.
That is the reason why it is very important for you to learn how to build corporate credit without using any personal guarantee. Your business credit, this way, will reflect the accurate picture of the financial success of your business. Following is a brief rundown on some of the basic steps that you can take in this regard.
Incorporate Your Business
When it comes to building corporate credit without using personal guarantee and to keep your personal financial affairs separated from your business affairs, the first thing you have to do is to incorporate your business either as an LLC (Limited Liability Company) or as a corporation. Just like your SSN (Social Security Number) that plays a crucial role in your FICO or credit score, the EIN (Employee Identification Number) that is issued to your business after it becomes an LLC or corporation plays an important role to determine your corporate credit. However, it is important for you to keep in mind that the EIN is not issued automatically; you have to apply for it. There is a simple application process regarding the same; you can visit the official website of the Internal Revenue Service (IRS) and apply for it.