How to Build Business Credit
Building strong business credit is one of the most important things you can do for your company's long-term financial health. Separate business credit opens doors to more funding options, better terms, and keeps your personal finances protected. Here's your complete guide to establishing and building business credit.
Why Business Credit Matters
Benefits of Strong Business Credit
| Benefit | How It Helps |
|---|---|
| Access to more funding | Qualify for products unavailable with personal credit alone |
| Better interest rates | Strong business credit = lower borrowing costs |
| Higher credit limits | Build capacity for larger purchases |
| Personal asset protection | Separate business from personal liability |
| Vendor relationships | Better payment terms with suppliers |
| Business valuation | Strong credit profile increases company value |
Business Credit vs. Personal Credit
| Factor | Personal Credit | Business Credit |
|---|---|---|
| Score Range | 300-850 | 0-100 (varies by bureau) |
| Bureaus | Equifax, Experian, TransUnion | D&B, Experian Business, Equifax Business |
| Access | Restricted | Anyone can view (usually) |
| Data Sources | Credit cards, loans, mortgages | Trade lines, lenders, public records |
| Building Time | Years | Months to years |
The Three Business Credit Bureaus
Dun & Bradstreet (D&B)
The largest and most widely used business credit bureau.
Key Scores:
- ●PAYDEX Score (1-100): Payment history-based, 80+ is good
- ●D&B Rating: Overall credit rating
- ●Financial Stress Score: Predicts payment problems
- ●Credit Limit Recommendation: Suggested credit capacity
How to Build D&B Credit:
- ●Get a DUNS Number (free at dnb.com)
- ●Complete your business profile
- ●Open trade accounts that report to D&B
- ●Pay all accounts on time or early
Experian Business
Key Scores:
- ●Intelliscore Plus (1-100): Predicts payment risk, 76+ is excellent
- ●Financial Stability Risk Rating: Business failure prediction
- ●Credit Limit Recommendation: Maximum credit exposure
How to Build Experian Business Credit:
- ●Verify your business listing
- ●Open trade accounts that report
- ●Maintain low credit utilization
- ●Update business information regularly
Equifax Business
Key Scores:
- ●Business Credit Risk Score (101-992): Higher is better
- ●Business Failure Score: Likelihood of business closure
- ●Payment Index (1-100): Average payment behavior
How to Build Equifax Business Credit:
- ●Ensure business registration is accurate
- ●Open reporting trade accounts
- ●Pay consistently on time
- ●Monitor your profile
Step-by-Step Guide to Building Business Credit
Phase 1: Establish Your Business Foundation (Month 1-2)
Step 1: Set Up as a Formal Business Entity
| Entity Type | Credit Building Ability | Notes |
|---|---|---|
| Sole Proprietorship | Limited | Uses personal credit |
| LLC | Good | Separate entity |
| S-Corporation | Excellent | Clear separation |
| C-Corporation | Excellent | Full separation |
Step 2: Get Your EIN
- ●Apply free at IRS.gov
- ●Instant online approval
- ●Required for all business credit applications
Step 3: Open a Business Bank Account
- ●Use your EIN (not SSN)
- ●Choose a bank that reports to credit bureaus
- ●Maintain consistent deposits
Step 4: Get a Business Phone Number
- ●Listed in 411 directory
- ●Under business name
- ●Verifiable by lenders
Step 5: Get Your DUNS Number
- ●Free at dnb.com
- ●Takes 30 days (or pay for expedited)
- ●Required for many credit applications
Phase 2: Establish First Credit Accounts (Month 2-4)
Start with Net-30 Vendor Accounts
These vendors extend 30-day credit terms and report to business credit bureaus:
| Vendor | Products | Reports To | Typical Limit |
|---|---|---|---|
| Uline | Shipping supplies | D&B | $250-$1,000 |
| Grainger | Industrial supplies | D&B, Experian | $500-$2,000 |
| Quill | Office supplies | D&B | $250-$750 |
| Crown Office Supplies | Office supplies | D&B | $250-$500 |
| Strategic Network Solutions | Tech supplies | D&B, Experian | $500-$1,500 |
Application Strategy:
- ●Apply to 2-3 vendors in first month
- ●Make small purchases immediately
- ●Pay invoices early (before due date)
- ●Wait 30-60 days for reporting
- ●Apply for additional accounts
Phase 3: Add Business Credit Cards (Month 4-6)
Starter Business Credit Cards:
| Card Type | Requirements | Typical Limit |
|---|---|---|
| Secured Business Card | Deposit required | $500-$5,000 |
| Store Business Cards | Lower requirements | $500-$2,000 |
| Small Business Cards | Some history needed | $1,000-$5,000 |
Popular Options:
- ●Secured: Wells Fargo Business Secured, First National Bank Secured
- ●Store Cards: Amazon Business, Staples Business, Home Depot Commercial
- ●General: Capital One Spark, Chase Ink Business
Credit Card Best Practices:
- ●Keep utilization under 30%
- ●Pay in full each month
- ●Use regularly to build history
- ●Report business revenue accurately
Phase 4: Expand and Diversify (Month 6-12)
Add Different Credit Types:
| Credit Type | Purpose | Building Value |
|---|---|---|
| Net-30 accounts | Trade credit | Establishes payment history |
| Business credit cards | Revolving credit | Shows credit management |
| Equipment financing | Installment credit | Adds credit mix |
| Small business loan | Term credit | Major profile builder |
Typical 12-Month Credit Profile:
- ●3-5 trade accounts
- ●2-3 business credit cards
- ●1 equipment lease or financing
- ●Consistent payment history
Building Credit Faster: Advanced Strategies
Strategy 1: Pay Early, Not Just On Time
| Payment Timing | PAYDEX Impact |
|---|---|
| 30+ days late | Score decreases |
| On due date | Score of 80 |
| 1-15 days early | Score of 90+ |
| 16+ days early | Score of 100 |
Strategy 2: Build Payment Velocity
More paid invoices = stronger profile. Even small purchases count:
- ●Make multiple small purchases monthly
- ●Each paid invoice adds to payment history
- ●Frequency can matter more than size
Strategy 3: Increase Credit Limits Strategically
| Timeline | Action |
|---|---|
| Month 3 | Request increase on first cards |
| Month 6 | Apply for higher-limit cards |
| Month 9 | Request limit increases again |
| Month 12 | Apply for unsecured lines |
Strategy 4: Monitor and Correct Errors
Check all three bureaus regularly:
- ●D&B: dnb.com
- ●Experian: experian.com/business
- ●Equifax: equifax.com/business
Dispute any errors immediately—they can significantly impact scores.
Common Mistakes to Avoid
Mistake 1: Mixing Personal and Business Finances
Problem: No separation = no business credit building Solution: Use business accounts exclusively for business expenses
Mistake 2: Not Reporting to Bureaus
Problem: Payments don't appear on business credit reports Solution: Verify vendors report before applying, or request they report
Mistake 3: Ignoring Small Trade Accounts
Problem: Only applying for large credit Solution: Start small and build systematically
Mistake 4: High Utilization on Revolving Credit
Problem: Maxing out credit cards Solution: Keep utilization under 30%, ideally under 10%
Mistake 5: Inconsistent Information
Problem: Different addresses, phone numbers, names across applications Solution: Use identical business information everywhere
Monitoring Your Business Credit
What to Monitor
| Bureau | Free Access | Paid Monitoring |
|---|---|---|
| D&B | Limited report | CreditSignal free alerts |
| Experian | Limited | Full monitoring ~$20/month |
| Equifax | Limited | Full monitoring ~$15/month |
Key Metrics to Track
| Metric | Target | Why It Matters |
|---|---|---|
| PAYDEX | 80+ | Payment reputation |
| Credit Utilization | Under 30% | Credit management |
| Trade Accounts | 5+ | Profile depth |
| Age of Credit | 1+ year | History length |
| Public Records | None | Legal issues |
Timeline Expectations
Realistic Building Timeline
| Milestone | Timeline | Requirements |
|---|---|---|
| First trade accounts | Month 1-2 | Entity, EIN, DUNS |
| PAYDEX score appears | Month 3-4 | 3+ trade accounts reporting |
| Business credit cards | Month 4-6 | Some history established |
| Good score (75+) | Month 6-12 | Consistent payments |
| Excellent score (90+) | Month 12-24 | Strong payment history |
| Significant credit access | Year 2+ | Mature profile |
Accelerating Your Timeline
| Action | Time Savings |
|---|---|
| Pay expedited DUNS fee | 3-4 weeks |
| Apply to multiple vendors at once | 1-2 months |
| Pay all invoices early | Faster score building |
| Use authorized user strategy | Varies |
Leveraging Business Credit for Funding
Credit Levels and Access
| Business Credit Level | Funding Options Available |
|---|---|
| No credit history | MCA, factoring only |
| Basic (1-6 months) | MCA, equipment financing |
| Developing (6-12 months) | Online term loans, LOC |
| Established (12-24 months) | Bank products, SBA |
| Strong (24+ months) | All products, best rates |
Using Business Credit Strategically
For Short-Term Needs:
- ●Business credit cards for small purchases
- ●Lines of credit for cash flow gaps
- ●Trade credit for inventory
For Long-Term Needs:
- ●Term loans for expansion
- ●Equipment financing for assets
- ●SBA loans for major investments
Summary: Your Business Credit Action Plan
First 30 Days
- ● Establish business entity (if not done)
- ● Get EIN
- ● Open business bank account
- ● Apply for DUNS number
- ● Get dedicated business phone number
Days 31-90
- ● Apply to 3-5 net-30 vendors
- ● Make purchases and pay early
- ● Apply for first business credit card
- ● Begin monitoring credit profiles
Days 91-180
- ● Add 2-3 more trade accounts
- ● Apply for additional credit cards
- ● Request credit limit increases
- ● Consider small equipment financing
Days 181-365
- ● Diversify credit types
- ● Build toward 75+ PAYDEX
- ● Explore larger credit opportunities
- ● Apply for business line of credit
Building business credit is a marathon, not a sprint. Start early, be consistent, and watch your options expand over time.