The easiest way to start establishing and building business credit is to get Nav Prime. Nav Prime gives you up to two tradelines reporting to all major business credit bureaus. While you're building business credit, you can also see your scores and the impact of your business credit building on your business credit profile — all with Nav Prime. Click here to get Nav Prime.
You can also apply for vendor accounts (or net-30 accounts). These accounts are one type of business tradeline that gives you 30 days (a form of credit) to pay your bill, rather than requiring payment upfront.
Many net-30 accounts report your payments to the major business credit bureaus, and these bureaus use that information to create business credit reports for your company.
Before you start
There are a few simple steps that are helpful to take before you start applying for easy net-30 accounts:
Get an employer identification number (EIN) from the IRS: An EIN is your federal tax identification number that you might need for vendor or credit applications. An EIN isn’t the identifying number in the business credit system the way Social Security numbers are for personal credit, but it helps create a separate business identity.
Register your business with your state. We strongly recommend you form a legal entity such as an LLC. Other options are S corps or C corps. If you decide to continue operating as a sole proprietor (no legal entity) we recommend you at least register your business name as a fictitious name (also known as a “DBA”) with your state.
List your business phone number with directory assistance. Here’s how.
Why get net-30 trade accounts?
Learning about net-30 vendor accounts was a game-changer for serial entrepreneur (and Nav founder and CEO) Levi King’s first business — a sign manufacturing business he launched in his twenties. Because he had been raised to avoid credit and debt, he bootstrapped his business, and cash flow was always an issue.
He’d have to purchase cement, plastic, steel and other supplies — plus cover labor and other overhead costs — before he could manufacture and install the signs his clients would purchase and pay for later. It was incredibly stressful and there were many sleepless nights when he worried about how he’d keep his business afloat.
Then one of his suppliers suggested he fill out a credit application, which would allow him to get supplies on net-30 terms, which meant he wouldn’t have to pay the supplier for thirty days. With that extra time to pay, he could often complete a job and invoice his clients without laying out money for the supplies up front. “It was a great way to float costs between customer payments,” Levi says.