Advertiser disclosure

How to Start Building Business Credit

The basic principles of building business credit are similar to those for building personal credit: Make your business's loan and credit card payments on time, keep your credit utilization low, and avoid collections. But your business credit score is marked on a different scale than your personal credit score, and it's monitored by different credit bureaus as well.

You’ll be hard-pressed to find a successful business that has never used OPM — Other People’s Money — to level up. And they got OPM with good business credit.

Business credit is used by lenders to determine if your company can be trusted to repay debts.

The better your business credit score, the more opportunities to access funds for expansion. The lower your business credit score, and, well…to paraphrase late street philosopher The Notorious B.I.G. in his “Ten Crack Commandments“: No credit? Dead it.

What’s the Difference Between Personal and Business Credit?

Business credit and personal credit are similar in concept, but not quite the same.

Brian Bond, Senior Vice President of Product, Marketing, and Strategy for Experian Business Information Services, shared the below breakdown with me on the differences between personal and business credit:

Personal credit is a reflection of an individual’s financial situation and how they manage their financial obligations. It includes information such as the number of credit cards they have, any loans they’ve taken out, if they make their payments on time, as well as any financial challenges such as bankruptcies or foreclosures.

Business credit is separate from an individual’s personal credit and is used by lenders to assess the risk of a business before making a lending decision. It includes information such as historical payment behavior; credit utilization; outstanding balances; any history of collections, liens, or bankruptcy; and company profile demographics, such as the age of the business, the employee size, and industry risk,” said Bond.

How Does Business Credit Work?

Think of a business credit score as a Yelp review for a company’s financial trustworthiness. Most people wouldn’t spend their money in an establishment that consistently gets one-star ratings and scathing comments from dissatisfied customers, right? Similarly, a business credit score helps lenders decide if they want to float money to a business.

Business owners who don’t repay their loans are bad for a lender’s bottom line. So lenders prefer to do business with people who have a demonstrable history of paying back money owed.

“Business credit works kind of like personal credit,” said L. McKinley, a certified financial planner and owner of MNM Vested, LLC  in suburban Houston. “The more you pay on time, the better your business profile will look.”

The higher a business’s credit score, the more likely that business is going to be able to receive funding, and at a lower APR.

Credit extended to a business can be used to pay payroll, purchase inventory, create a financial safety net, and cover many other essential company needs. Even if a business has healthy savings, using OPM is preferred by many owners.

“It [a business credit score] is crucial for obtaining funding for launching and expanding businesses and can also help save money,” Bond said. “For example, a good business credit score can help business owners qualify for better interest rates and enable small businesses to obtain credit without the need for a personal guarantee, which reduces personal liability.”

Yet the National Small Business Association says that roughly one-in-four businesses it surveyed claimed they were unable to receive the funding they needed. And that lack of funding frequently prevented them from growing their businesses.

In a capitalistic society, if a business can’t grow, it’s unlikely to succeed. A larger or more nimble competitor will take it out. Having a decent business credit profile is the first step in potentially receiving funding from major lenders and building a thriving company.

How Can Businesses Establish Credit?

Bond recommends taking the following steps to establish business credit:

  1. Set up a name for the business and register with local and state governments.
  2. Incorporate or form a limited liability company (LLC) to guarantee that your company is seen as a separate business entity.
  3. Get a federal Employer Identification Number (EIN).
  4. Use the EIN to open business bank accounts, business credit cards, commercial loans, a lease, and utilities in the legal business name rather than your personal name.
  5. Set up a dedicated business phone line in the business’s name and make sure that it is listed.

Then you have to make sure your business’s credit is, well, getting credit.

Andrew Lokenauth, an adjunct professor of entrepreneurship at the University of San Francisco’s School of Management and the founder of Fluent in Finance, advised business owners to establish a line of credit with their vendors or suppliers. Then ask those vendors or suppliers to report your payment history to the business credit reporting agencies.

How to Build Business Credit Without Using Personal Credit

Business owners should open a business credit card and/or loan accounts using a business tax ID number and not their social security number, McKinley said. That way the payment activity will be filed on the business credit report and build the business credit profile.

By keeping personal and business credit separate, small business owners can make sure that any financial challenges that occur on one credit profile do not affect the other, Experian’s Bond said.

“Separating business credit from personal credit is critical for business owners because if the business becomes at risk, the owner’s personal credit will also be affected,”  Bond said.

Who Monitors Business Credit?

The three major agencies that monitor and record business credit are Dun & Bradstreet, Equifax, and Experian.

While Equifax and Experian create credit reports for both individuals and businesses, they do so separately and the results are compiled based on different sources of information, said Bill Ryze, chartered financial consultant and board advisor at online loan marketplace Fiona.

Dun & Bradstreet calculates business credit scores only.

What Is a D-U-N-S Number?

“Get a D-U-N-S number ASAP,” advised Lokenauth. “It’s the initial step in establishing your organization’s D&B credit record.”

A Data Universal Numbering System, or D-U-N-S number, is a unique nine-digit number assigned by Dun & Bradstreet. Anyone who wants to do business with you can look it up to determine your business’s creditworthiness. A D-U-N-S number is also required to apply for government awards and agreements or Small Business Administration advances, Lokenauth said.

A business that is established as a legal entity can apply for free for a D-U-N-S number on the D&B website.

It can take up to 30 days to get your D-U-N-S number. Once it’s established, your business will be rated by D&B and assigned a PAYDEX score, which is similar to a FICO score, but for businesses, said Lokenauth.

How Long Does It Take to Build Business Credit?

In order to generate a credit score, Experian requires certain minimum information, which includes at least one tradeline and/or one demographic element. Once a business owner has either of these reported, a business credit report is established as well as a credit score.

Experian says that establishing a business credit file can take just a matter of weeks and sometimes as little as a few days. This depends on when Experian sees a public record or contributed data that validates that the business is legitimate.

But establishing a good score won’t happen overnight. “Understand that business credit cannot be built fast, and anyone promising this is a grifter,” warns Lokenauth.

“It’s possible for a small business owner to start seeing business credit improving within a short period, but it’s more likely that they’ll see improvements over time as they build up good payment histories,” Bond said. “Oftentimes, it can take business owners one to three years to build up business credit histories depending on how active they are at leveraging credit and proactively taking steps to build credit.”

To build and maintain a good business credit score, owners should pay their financial obligations on time, report trades, and regularly review their business credit report to be sure the information is accurate and up-to-date, said Bond.

McKinley noted that in order to develop a good score there has to be a long period of payment activity. “The more credit history the better,” he said. “There’s not much credit history established in the first year of payments.”

How to Check Your Business Credit Score


Once business owners register for a business credit file with Experian, they can check their credit score by accessing their Experian business credit report. It’s just under $40 to check.

They can also decide if they would like to use a monitoring service such as Experian’s Business Credit Advantage for extra support. This service provides business owners with unlimited access to their credit report and tools to manage and grow their credit score, automatic alerts that keep them informed of any inquiries or derogatory filings, and identity monitoring that proactively detects stolen business information and compromised confidential data online.


Businesses applying for business credit — such as a business loan or a business credit card — can request a copy of their Equifax business credit report with that application to review and resolve any inaccuracies. It is a manual process and cannot be completed from the Equifax website. Rather, you will need to reach out to an Equifax representative and initiate a request for the report, providing documentation that you are an authorized representative of the company and that you are requesting the report along with an application for business credit.

There is currently no cost associated with requesting a business credit report directly from Equifax, the company told me.

As part of its report, Equifax gives a business a few different scores, such as a business payment index, which rates your businesses payment history; a business credit risk score, which determines how likely you are to pay bills in the future; and a business failure score, which rates the likelihood of a business shuttering within the next year.

Dun & Bradstreet

D&B issues a PAYDEX score for your business credit score.

To check your PAYDEX score, you can purchase a business credit report from D&B for $61.99. D&B also offers several monthly subscriptions for building and/or monitoring your business credit, ranging from $15 to $199 per month.

It’s worth noting that instead of going directly to the credit agencies, consumers can also use the website Nav, which allows people to access their business credit scores for free.

What Is a Good Business Credit Score?

Different ranges are used for business and personal credit scores. While a personal credit score can be between 300 and 850, business credit scores are between 0 and 100, with 100 representing the highest score or lowest risk of missing payments.

For personal credit, a score of 670 or above is considered good, while for business credit, a score of 75 or above is considered good, said Ryze.

“In general, business owners should strive for a higher credit score to ensure that they have access to the options and resources they need to help their businesses thrive,” Bond said.


Although bootstrapping a business is often glamorized, access to extra funding at low interest rates can be what helps your business get to the next level. And your business will need a solid credit score to earn the respect of potential creditors.

A good business credit score signals to lenders that you aren’t a fly-by-night operation, and that they can reliably lend to you. It takes time and diligent payment habits to build your score up, but the rewards will be well worth it.

Your money deserves more than a soundbyte.

Get straightforward advice on managing money well.

Most financial content is either an echo chamber for the "Already Rich" or a torrent of dubious advice designed only to profit its creators. For nearly 20 years, we've been on a mission to help our readers acheive their financial goals with no judgement, no jargon, and no get-rich-quick BS. Join us today.

Aweber pixel