How to Get and Build Business Credit

Business credit is a way to evaluate the financial strength of a company. A strong business credit score can help you secure better terms on business loans, lower rates on business insurance and more favorable terms with suppliers.

Establishing business credit for the first time can be fast and easy. You’ll need to register your business, apply online for two different identification numbers and then open a business credit card or trade line that reports to business credit bureaus.

But building your business credit — developing a history of on-time payments on multiple credit lines — takes patience. Here’s a step-by-step guide on how to establish business credit, plus tips for building a strong credit profile over time.

For new business owners, the first step to establishing business credit is to register your business.

This process will vary depending on your business structure and where you live. Some states do not require sole proprietors to register if you operate under your own name (though you may still need a local business license). If you start an LLC, you’ll most likely need to register your business.

Make sure you also apply for an EIN, or employer identification number, with the IRS. This business tax ID is required by the IRS for many businesses — and it may be necessary for taking other important steps, like opening a business bank account.

There are three primary business credit bureaus: Experian, Equifax and Dun & Bradstreet.

Getting a business credit score from Dun & Bradstreet requires you to first apply for a DUNS number. You can do this for free on Dun & Bradstreet’s website. ^[0]

Lenders and other businesses will often use this unique nine-digit number to look up your company’s credit profile and financial health before agreeing to do business with you.

There’s no need to apply for business credit with Experian and Equifax, though. Those companies start credit files for your company on their own based on borrowing information from lenders that report to these bureaus. They also pull in information from public records, like court filings.

» MORE: What you need to know about business credit scores and reports

You can get a business credit card without an established business credit profile — issuers use your personal credit score to decide whether to approve you. Opening a business credit card early can help you start building credit sooner, which means you’ll have a longer credit history — and potentially a stronger score — in the future.

If you have good or excellent personal credit (a FICO score of 690 or above), you’ll have lots of business credit card options. If not, you can consider the options available to you — including secured business credit cards, fair-credit business credit cards and bad-credit business cards — or skip to the next step.

Over time, using your business credit card responsibly can help you build business credit. Most small-business cards report activity to business credit bureaus, so on-time payments and low credit utilization (less than 30% of your available credit) will help build your business credit score.

On the other hand, missed payments and delinquencies often negatively impact both your business and personal credit scores.

» MORE: Business credit cards with no personal credit check

Suppliers often extend trade credit, which allows you to pay several days or weeks after you receive the inventory. When a supplier gives you 30 days to pay your invoice, this is known as a net-30 account.

This type of accounts-payable relationship can boost your business credit score — provided your supplier reports payments to a business credit bureau. If they don’t, you can list them as a trade reference on your account and Dun & Bradstreet will follow up to collect your trade data.

You can ask to set up trade lines with any small vendor, such as your water or office supplies distributor. Try to set up several; Dun & Bradstreet says its scoring model can consider up to 875 different vendors, for instance.

Small-business loans can boost your business credit if you make all your payments on time — but not all lenders report to business credit bureaus. Merchant cash advance companies typically don’t, for instance, while online business loan companies generally do.

If you’re applying for financing, ask potential lenders whether they report data to business credit bureaus. Weigh their responses against other components of their offer, like the interest rate, to find the right fit.

» MORE: Business loans you can get without a personal guarantee

Once you’ve established your business credit, your behavior will begin impacting it — for better or for worse. Here’s how you can build strong business credit.

Pay creditors on time — and early if possible

Payment history is the most important factor in determining your business credit score. Making debt repayments on time and in full will help you build a stronger business credit profile over time.

While on-time payments are good, early payment is even better. Dun & Bradstreet assigns better Paydex scores, its primary scoring model that evaluates a business’s payment history, to companies that pay early.

Avoid judgments and liens

Judgments, liens and bankruptcy filings in your business’s name all negatively impact your business credit score. Unpaid taxes or business debt can result in a lien, granting creditors a legal right to seize your property to satisfy the debt. And unpaid debt may eventually result in a court ruling — or judgment — against your business to collect the debt.

These negative marks on your business credit report can haunt you. Experian, for instance, keeps bankruptcies on business credit reports for nearly 10 years. Tax liens, judgments and collections can remain for almost seven years. ^[0]

» MORE: What happens if you can’t pay your business credit card?

Keep your information current with all three business credit bureaus

As with personal credit, it’s smart to keep tabs on your business credit report to ensure all of your information is accurate.

Check your business credit score with all three main business credit bureaus: Dun & Bradstreet, Experian and Equifax. Then, ensure all trade lines are accounted for. And report any errors — especially incorrect negative marks, but also mistakes like misspelled addresses — to the respective business credit bureau.

Business owners with solid personal credit will likely have financing options available to them even before they’ve established business credit — you can often qualify for a business credit card on the strength of your personal credit alone, for instance.

If you have a low personal credit score, it’s still possible to establish and grow your business credit by using tools like net-30 accounts. But your personal credit score will continue to matter. The vast majority of business credit card issuers and business lenders check personal credit scores as part of their approval process, regardless of business credit score, to make sure that the borrower will be able to repay the debt if the business can't.

» MORE: Get your free credit score from NerdWallet