Building credit is an important thing for any business. Avoid the pitfalls most people make when dealing with business credit reporting. Read on to discover the top 7 myths.

Building your business credit is extremely vital to the success of any business, and using business credit reporting is an important way to stay on top of what the credit bureaus are reporting about you. You will need a good credit report to get loans, make deals with suppliers and even find investors to help you expand your business.

There are many different types of credit a business may want to have including credit cards, loans, accounts receivable, merchant account cash advances, lines of credit, equipment financing as well as traditional secured and unsecured loans. With so many options, sometimes it can be difficult to decide what the right choice is when your business needs money. No matter what you choose, your business credit reporting will determine how good of a deal you get.

#1 Myth – You only need a Paydex Score of 80 to get all the financing you’ll ever need. An 80 on Paydex is about the equivalent of a 720 score in consumer credit. Just because you have a high Paydex doesn’t necessarily mean you’ve proven your business to do any substantial volume, credit wise. So sometimes you may have a high Paydex score and still not be approved for larger loan amounts.

#2 Myth – All you need is a high Paydex score to qualify for a line of credit. As stated above, your Paydex score isn’t the only factor used to determine whether or not you qualify for new credit. Your bank rating, balance rating and NSF record also have a lot to do with whether or not you will be approved for a new loan.

#3 Myth – Buying a “shelf corporation” is the easiest way to get credit. A shelf corporation is a company that has been established for a number of years, which can typically get a loan much easier than a brand new business. It is good to have an aged business, but if that business hasn’t actually been making very much money, it can still be difficult to find credit.

#4 Myth – Every business already has a report filed with the major business credit bureaus. Dun & Bradstreet require you to register for a DUNs number and even require you to send in your Experian and Equifax reports. The other major bureaus also require some more of registration and verification to begin any business credit reporting.

#5 Myth – All credit cards report to business credit bureaus. Most business cards require an individual to provide a personal guarantee on the card so they typically report to your personal credit report. Only credit cards backed solely by your company will report to business credit bureaus, which is less than 10% of all available business credit cards.

#6 Myth – All suppliers, lenders and vendors will report to your business credit bureaus. Unfortunately, this isn’t the case, which can make building business credit difficult at first. A very small percentage of companies that extend credit to other businesses actually do any business credit reporting.

#7 Myth – Credit repair is illegal and shouldn’t be done. This is untrue and anyone who tells you this has been misinformed. You should do everything you can to repair and maintain a good credit report.

Your credit is an important tool to help your business succeed and grow. Using business credit reporting is a smart way to stay on top of this valuable asset.