Now that you know more about how business credit works and how business credit rating affects your ability to get a business loan, you might find it helpful to take a look at the following checklist to see where you and your business stand.

• Do you have the best structure for your business?

  Most entrepreneurs seem to favor sole proprietorships because of its overall simplicity when compared to corporations or limited liability companies (LLC), but as we have already seen, one key advantage of a corporation is that it is not tied to your social security number. In fact, technically speaking, a loan that you procure for your sole proprietorship is a personal loan that you use for your business. It is not a business loan, so it does not help you reach your goal of building business credit.

  Nonetheless, a corporation does have its drawbacks, not the least of which is that managing a corporation can be more time consuming than managing a sole proprietorship. For example, corporations require a substantial amount of record keeping. Required documentation includes annual meeting minutes, corporate resolutions and the issuing of shares to stockholders.

• Do you have an EIN and a state tax identification number?

  Tax identification numbers, both federal and state, help keep your personal and business credit separate. In fact, you cannot begin building business credit without them.

• Do you have a D-U-N-S Number?

  You can’t begin building your business credit report at Dun & Bradstreet without a D-U-N-S Number.

• Do you have a business bank account?

  If you are still using a personal bank account for your business, you will not be able build business credit. Instead, you need at least one business bank account to serve as a bank reference when you apply for business credit.

• Do you have up-to-date documentation for your business?

  Failure to maintain and update the appropriate documents could negatively affect your business credit. Business credit reporting agencies review these publicly available documents as one method of determining your business’s credit worthiness. For example, if you have not filed, with the state in which your business is incorporated, the minutes from the annual meeting of your corporation, your business lack credibility in the eyes of the business credit reporting agencies.

• Do you know the age of your business?

  Superficially, this is a simple question, but when you start to think about it, the age of your business can vary depending upon how you determine your actual start-up date. And how you answer this question can make the difference in whether or not you get the loan.

  Most will consider that your business begins the day you get your business license, but what if you didn't fill out all the paperwork right away? Sometimes in our haste to get started, we will begin our business before we even have the appropriate licenses. In this case, you actually could have been operating longer than the issuing of your business license reveals. In fact, waiting to get a business license is a common mistake make by new business owners. It is always best to get your license before you open your doors.

  But what if you didn't get your license until later? You may consider the day when you began generating revenue as the birth date of your business. Some creditors, however, may rely upon the date when you first filed federal income taxes that include your business income for verification of your start date. Obviously, this means that you could have been operation for several months by then and when it comes to a new business, a few months can make the difference needed when to comes to getting a loan.

  Another date that is often used to determine the age of a business is the date of incorporation. This, too, can make your business appear to be younger than it actually is. For example, let's say that you began your business as a sole proprietorship, but after operating for a few months or even a few years, you realized that being incorporated could offer many benefits. In this case, the date of incorporation would not be when you started your business.

  When filling out loan applications you want to use the first possible date of your business start up since longevity matters. So unless the date of incorporation coincides with the date when you actually started doing business, you don't want to use this date on the application. Note, however, that some applications will specifically ask for the date of incorporation; many others do not.

  Why does this matter? The longer your business has been in operation the more likely you will be to get business credit, especially from certain types or creditors.

• Do you know how to keep your credit limits high and your debts low?

  If you have maxed out all of your business credit cards and used almost all of your existing lines of credit, it will near impossible to get a business loan. Creditors become extremely nervous when they see a very high debt to credit ratio.

  Consider this scenario. You have three business credit cards which each have a credit limit of $5000. You also have a line of credit from your home town bank for $20,000. The balance on each of your credit cards is $4500 for a total credit card debt of $13,500. And you have a balance of $16,500 on your line of credit at the bank. Your total debt is $30,000 and your total available credit is available credit is $35,000 giving you a debt to credit ratio of slightly more than 85%. Bear in mind that most creditors prefer a debt to credit ratio that is less than 60%, so you most likely will not get the loan that you need.

  Now consider this example. Each of your three credit cards have $10,000 credit limits and your line of credit at the bank is $30,000. You have the exact same amount of debt as in the above example. That is a total debt of $30,000. The difference, however, is the amount of available credit, which is now $60,000, yielding a debt to credit ratio of 50%. This is a much more attractive figure to creditors. You will most likely get your loan.

  The point to remember here is that it is not necessarily the actual amount of debt that you have accrued that will sway the decision of creditors, but it the debt to credit ratio that matters. A good way to help keep this debt to credit ratio low is to periodically call your credit card holders and your bank and request higher credit limits.