How to Build Business Credit: 14 Ways to Financial Prosperity

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In order to build a successful business, you need more than just a great idea. You also need good credit. Understanding how to build business credit is vital as it can be used to secure loans, lines of credit and other financial assistance to help your business grow.

In this article, we’ll discuss 14 ways to enhance business credit with the guidance of business credit bureaus. If this sounds like the golden ticket to propelling your business forward, you’re right. Let’s dive in!

How to Build Business Credit

how to build business credit - businessman meeting with a loan officer

How do you build business credit? It’s a question that many small business owners ask, and for good reason. There are a number of things you can do like watching your credit utilization, but here are 14 of the most effective strategies:

1. Establish Your Business Entity

Establishing your business entity is a critical step in legitimizing your business. It involves choosing between several structures, such as Sole Proprietorship, Partnership, Limited Liability Company (LLC), or Corporation.

This decision impacts your liability, tax obligations, and ability to raise capital. For instance, an LLC offers personal liability protection and tax flexibility, while a Corporation is ideal for businesses that plan to issue stock.

Registering your entity with the appropriate state authorities and obtaining an Employer Identification Number (EIN) from the IRS solidifies your business’s legal standing.

2. Register Your Organization

Registering your business with a business credit bureau, such as Dun & Bradstreet to obtain a D-U-N-S number, is crucial for establishing a business credit profile.

This registration allows lenders and vendors to assess your business’s creditworthiness based on your business transactions and payment history. It’s a foundational step in building a reputable business credit report.

3. Set up a Business Bank Account

A business bank account segregates your personal finances from your business transactions, enhancing your company’s professionalism and credibility.

It simplifies accounting processes and supports your case when applying for business credit or loans by showcasing your business’s cash flow and financial health to potential lenders.

4. Apply for a Free DUNS Number

The D-U-N-S number from Dun & Bradstreet is a nine-digit identifier for businesses. Applying for this number is free and essential for establishing your business credit. It’s recognized globally and used by creditors to predict the reliability and financial stability of a business, influencing your ability to secure financing and contracts.

5. Report to Business Credit Reporting Agencies

Actively reporting your business transactions and financial standings to credit bureaus can help establish and improve your business credit score. Ensuring that your vendors and creditors report your payment history to agencies like Experian, Equifax, and Dun & Bradstreet can significantly impact your creditworthiness in the eyes of future lenders.

6. Establish Trade Lines with Vendors and Suppliers

Trade lines are credit accounts with vendors or suppliers. Establishing multiple trade lines and ensuring they report your payment history to credit bureaus is an effective way to build your business credit. On-time or early payments on these accounts can positively affect your business credit score.

7. Get a Business Credit Card

Securing a business credit card and consistently making timely payments is a straightforward way to build credit. It also helps in keeping personal and business expenses separate, simplifying tax preparation and financial management.


8. Apply for a Line of Credit

A business line of credit not only provides flexible access to funds but also contributes to your credit history when managed properly. Regular use and repayment of a credit line can positively influence your business credit score.

9. Make Timely or Early Payments

Your payment history is a significant factor in your business credit score. By ensuring that all bills, loans, and credit card payments are made on time or early, you demonstrate financial responsibility and reliability to creditors.

10. Connect with Other Businesses in Your Industry

Networking with other businesses can lead to trade credit opportunities, partnerships, and shared financial advice. These connections can support your business’s growth and potentially improve your access to credit.

11. Join an Entrepreneur Group or Networking Organization

Membership in business associations or networking groups can provide valuable resources, mentorship, and exposure. These organizations often offer workshops on finance management and opportunities to connect with lenders familiar with providing credit to small businesses.

12. Request Trade References from Suppliers and Customers

Trade references can bolster your credit application by providing lenders with evidence of your business’s reliability and prompt payment history. These references act as testimonials to your business’s financial responsibility.

13. Borrow Responsibly

When utilizing credit, it’s crucial to borrow within your means. Overleveraging can harm your credit score and financial health. Responsible borrowing and repayment reflect positively on your business credit report.


14. Monitor Your Credit Scores

Regularly checking your business credit report for inaccuracies and tracking your credit score’s progress can help you understand how financial actions influence your credit. Immediate correction of any errors ensures your credit report accurately reflects your business’s financial stability.

how to build business credit - business credit card

Why it’s Important to Establish Business Credit

Establishing a robust business credit profile is a critical step in fostering a healthy and sustainable business. It not only opens the door to financial opportunities but also establishes trust and credibility in the market. Here’s why dedicating time and effort to build business credit is essential:

  • Access to Better Loan Terms: A good business credit score can help you secure loans with more favorable terms, including lower interest rates and higher credit limits.
  • Separation of Personal and Business Finances: Building business credit helps to separate your personal finances from your business, protecting your personal assets and improving the creditworthiness of your business.
  • Leverage in Negotiations: Having established business credit can give you a better standing when negotiating terms with suppliers and vendors, potentially leading to better payment terms and lower costs.
  • Preparation for Future Opportunities: As your business grows, opportunities for expansion will arise. Having established business credit ensures you are prepared to seize these opportunities without unnecessary delays.
  • Attractive to Potential Investors: A strong business credit profile can make your business more attractive to potential investors or buyers, as it is a testament to the financial health and stability of your business.
  • Improved Chances for SBA Loans: Establishing business credit enhances your chances of securing a Small Business Administration (SBA) loan, which can be a vital resource in scaling your business.
  • Increased Business Value: Over time, having established business credit can increase the overall value of your business, as financial institutions, and potential partners or acquirers view it as a lower risk investment.

When you’re just initiating your business journey, establishing credit with business credit bureaus is a vital step. It not only facilitates access to lines of credit and loans, vital for financing your business expenses but also enhances your eligibility for Small Business Administration loans.

how to build business credit - credit graphic drawn on a chalkboard

While building business credit is not a complex process, the process does require time, strategic planning, and consistent efforts.

Initiating this process early on, coupled with maintaining a positive payment history and making informed financial decisions, can set a strong foundation for a prosperous business future.

Remember, building credit is a gradual process that’s instrumental in paving the way toward making your enterprise thrive.


5 Benefits of Building Business Credit

how to build business credit - woman with a cup of coffee looking at her good credit rating on a laptop

We’ve already established that business credit is important for getting loans and other forms of financial assistance. But what are some other benefits of building business credit? Here are five benefits that building business credit brings:

  1. Builds credibility. Good business credit demonstrates to vendors, suppliers, and other business contacts that you’re a reliable, reputable company.
  2. Gives you a financial safety net. If you have business credit, you can tap into it in times of need. This can help you weather a financial crisis or take advantage of opportunities when
  3. Track your expenses. Personal and business finances can get mixed up quickly, making it difficult to track business expenses. However, if you have business credit, you can more easily keep track of your business expenses, which can be helpful come tax time.
  4. Get better terms from suppliers. Good business credit scores can give you access to better terms with suppliers, such as extended payment terms.
  5. Helps you get loans. This is the most obvious benefit of business credit, but it’s worth mentioning again. If you have good business credit, you’re more likely to get approved for loans and other forms of financing.

Step-by-Step Guide to Building Business Credit: A Checklist

As mentioned, building business credit is essential for securing future funding and fostering a thriving enterprise. Use this comprehensive checklist to systematically build a robust business credit profile.

1Establish Your Business Entity: Incorporate as an LLC or other corporate entity, acquire an EIN, and establish a dedicated business phone line.[ ]
2Register Your Organization: Register with a business credit reporting agency to initiate your business credit file and facilitate the reporting of your payment history.[ ]
3Set up a Business Bank Account: Use this account for all business transactions to build a strong payment history, enhancing your chances of loan approvals.[ ]
4Apply for a Free DUNS: Secure a D-U-N-S number, a unique identifier that credit bureaus use to start reporting your business payment history.[ ]
5Report to Business Credit Reporting Agencies: Maintain a positive payment history in your business credit reports, a critical factor in determining your creditworthiness.[ ]
6Establish Trade Lines with Vendors and Suppliers: Build credit with vendors and suppliers, facilitating the purchase of goods and services on credit during startup or cash flow issues.[ ]
7Get a Business Credit Card: Utilize a business credit card to establish a positive payment history, enhancing business credit scores and potentially leading to an increased credit limit.[ ]
8Apply for a Line of Credit: Access flexible financing options with a business line of credit, allowing borrowing up to a set limit with interest charged only on the borrowed amount.[ ]
9Make Timely or Early Payments: Build trust with creditors by consistently paying bills on time, reflecting positively on your credit report.[ ]
10Connect with Other Businesses in Your Industry: Foster connections with industry peers to open up potential avenues for trade credit or other financing opportunities.[ ]
11Join an Entrepreneur Group or Networking Organization: Expand your network and gain insights through membership in business groups, potentially unveiling new financing opportunities.[ ]
12Request Trade References from Suppliers and Customers: Actively solicit trade references to bolster your business credit report and score.[ ]
13Borrow Responsibly: Maintain healthy credit utilization by avoiding maxing out credit cards and managing debts wisely to enhance your business credit score.[ ]
14Monitor Your Credit Scores: Keep a close watch on your business credit scores to promptly address any issues, ensuring the sustained strength of your business credit profile.[ ]

Feel free to print or save this table as a guide to systematically build and maintain a strong business credit profile.

Here’s a word from Karlton Dennis on “How To Get Business Credit for Your LLC in 2023” you’ll want to check out after reading:

FAQs: How to Build Business Credit

How long does it take to build business credit?

When learning how to build credit for business, it’s important to remember that Rome wasn’t built in a day. It takes time to build business credit, usually about 6-12 months. But, the effort is worth it.

Can a personal credit card help with building business credit?

No. You need to use a business credit card to establish business credit. However, your personal credit score may go down since a hard inquiry will be run when you apply for your credit card.

Can you establish company credit if you don’t have any debt?

Yes, it is possible to establish business credit without incurring any debt. One way to do this is to get a business credit card with a $0 balance. Another way to do this is to join a business credit monitoring service.


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Kevin Ocasio Kevin Ocasio is a staff writer for Small Business Trends and has been with the team for 2 years. He holds certifications in SEO, digital marketing, and content marketing. Kevin is also certified in Information Technology Technical Support Fundamentals.