Building Business Credit

Building Business Credit

Why is it important to establish business credit?

Business credit can be used as a major financial tool for your business. Building credit starts with getting your business properly established, then opening bank, vendor accounts and credit cards.

It's important to understand that your business can have its own credit reports and scores. Anyone can check business credit, so it may be used by lenders, suppliers or even companies deciding whether to do business with you.

Good business credit may help you qualify for small business loans and financing.

While having good business credit is great, don't neglect your personal credit. For some accounts (when you're first beginning to establish your business or for large credit lines), the owner may be required to provide personal guarantees. A personal guarantee (PG) refers to an individual's legal promise to repay credit issued to a business for which they serve as an executive or partner. You can choose to avoid accounts that require a PG if your main objective is to completely separate yourself from your business and allow your business to stand on its own 2 feet. However, the harsh reality is that some small business lenders check personal credit, and that some loans, including bank loans or SBA loans, will require a personal guarantee. 

The good news is that you can start building business credit even if your personal credit isn’t strong. 

How to build business credit 

 The key to building good business credit scores is to do business with companies that report payment history, and then to pay on time and keep debt levels manageable. 

It really can be that simple. 

7 steps to establish business credit:

1. Build your foundation:

-Name and Register Your Business

-Establish Business Address

-Choose Business Entity

-Federal Tax ID/EIN

-Telephone Service

-Company Logo

-Professional Website

-Professional Email

-Business Licenses

-Credibility Through Social Media


2. Get a D-U-N-S number

3. Get accounts that report

4. Open a business credit card

5. Pay on time

6. Monitor your credit


1. Build your foundation and register your business

To effectively establish business credit, it helps to properly establish your business. If your business is new, take the time to set up your business so it appears professional to both clients and lenders. 

Get a business phone number and, if possible, get it listed in directory assistance. Get and use a professional email address. Choose and consistently use a business address, which can be P.O. Box or even your home address if you’re just getting started. 

Most businesses should be officially registered with their state. If you formed a business entity such as an LLC or S Corp in your state, you should have completed this step. Annual filings will likely be required. (If you formed your business in another state, you may also need to register your business in the state in which you do business. 

If you are operating as a sole proprietorship or independent contractor and have not registered your business, you can file a fictitious business name with your state. (This is sometimes referred to as a “DBA”.)

In either case, you may need to get professional or business licenses. Check your state requirements. 

Why is this important? Public information such as this may be used by some commercial credit agencies to start your business credit profile.

2. Get a D-U-N-S number

A DUNS number is your business identifier with the credit reporting agency Dun and Bradstreet. If your business doesn’t already have one (you can check whether it does for free), you will want to request one. It’s free. 

Creditsafe, Equifax and Experian all have separate identifiers (numbers to identify your business in their systems) but you don’t have to initiate this type of request with them. 

An EIN is the business equivalent of a Social Security number. The IRS requires some businesses to get an Employer Identification Number (EIN), but having one is not required to establish a business credit file. However, some business financial applications may require an EIN, and EINs may be reported to business credit reports. 

Why is this important? It ensures your business is visible to Dun &Bradstreet.

3. Get accounts that report to business credit agencies

The most important part of any credit report is information on how you’ve paid your bills. Past payment history is used to help predict how likely your business is to pay on time in the future. That means you need accounts that will report to business credit bureaus, and not all do. Ideally you’ll want to establish at least 2-3 accounts with companies that report. More can be helpful as your business grows.

These may include:

  1. Suppliers and vendors
  2. Business loans and financing
  3. Credit builder accounts
  4. Business credit cards

No lender or vendor is required to report to business credit; some do and some don’t. Some may report to one or two of the major commercial credit bureaus, but not others. So if your goal is to build business credit, you must choose accounts that report. 

Why is this important? If you don’t have any accounts with payment history, you’ll likely have no business credit report or a report with a low credit score. 

4. Open a business credit card

Opening a business credit card that reports to the major commercial credit reporting agencies is a great way to establish business credit. You can benefit from perks such as cash back or travel rewards, but you can also use one of these cards to build credit. 

Most small business credit cards will use the owner’s personal credit scores and income from all sources to determine if you qualify. That means they are available to startups as well as established businesses.

You definitely should have at least one open business card if you qualify, but more than one can also help. However, be sure to use caution and avoid getting overextended as that can hurt your business credit scores. 

If you don’t qualify for a business credit card, you can skip this step but come back to it in the future when your personal credit history has improved. 

Why is this important? Business credit cards can help establish credit when paid on time. 

5. Pay on time

Payment history is the most important factor for any type of credit scores, and especially so for business credit. Business credit reports use a term called, “Days Beyond Terms” (DBT) that describe how many days beyond the due date a payment was made. For example, if your terms with a vendor is “net-30,” and you pay on day 32, the account will be reported as 2 DBT. Yes, that means your business credit score can be affected if you pay just a day or two late. 

Pay on time or early if you can, and you may build your business credit score more quickly.

Why is this important? Payment history is the single most important factor for building business credit. 

6. Monitor your credit

Diligently monitoring your business credit history can help you monitor your progress as well as spot mistakes. If you do find an error, be sure to file a dispute with the credit bureau reporting the mistake. 

Be sure to check your credit reports and scores with more than one major credit reporting agency to find out whether your accounts are helping your scores, and if not, consider adding additional credit references.

Why is this important? Monitoring your business credit can alert you to problems so you can investigate further.

How long does it take to establish business credit?

It may take a few months before new accounts appear on your business credit reports. Once they do, you’ll need several months of on-time payments to establish a good business credit score. Whether you have a new business or one that is well-established,  if you take the steps above, you may be able to establish a good business credit rating in several months to a year. 

What is the starting credit score for a business?

Business credit scores have different ranges. The Experian Intelliscore and the D&B Paydex score both start at 0 and go up to 100. Other scores may start at a different number. If your business hasn’t established credit, you may have a low credit score or no credit score at all.   

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