Back to Knowledge Center

Building Business Credit

If your company is in the start-up phase you might have to rely on your personal credit to prove your creditworthiness. But, as your company grows, establishing a separate credit report for your business is very important. If you use personal money or credit scores to acquire funding for your business, you become personally liable for all your business debt.

You can begin establishing credit even before starting operations:

  1. Establish a legal business entity. Consider establishing your business as a corporation or Limited Liability Company rather than as a sole proprietorship. This helps to separate your personal credit history from your business credit profile.
  2. Obtain your Federal Employer Identification Number (FEIN). Get a federal tax identification number from the Internal Revenue Service to separate company transactions from personal ones and develop a business credit profile.
  3. Open a Separate Business Bank Account. Business funds and personal funds must be separate.
  4. Confirm your Business Listing. You must confirm that every agency and trade credit vendor has your business listed the exact same way, with the same address and phone number.
  5. Obtain a D-U-N-S Number. This is a 9-digit number issued by Dun & Bradstreet that most companies utilize to verify the credit history of businesses.
  6. Register with the business credit reporting agencies. Dun and Bradstreet and Experian are currently the leading names in providing business credit tracking services.
  7. Compliance. Make sure you?ve obtained all necessary business licenses, permits, etc. that are required in your jurisdiction.
  8. Get a Business Credit Card. One of the easiest ways of building your business credit is by obtaining a business credit card.

Once you have everything above in place, begin building business credit report by obtaining business or trade credit with vendors or suppliers. Seek business only with vendors and suppliers that are set-up to report your company's payment history to the credit reporting agencies like, Dun & Bradstreet and Experian. Business are not required to report payment history to the credit reporting agencies.

It is important to be diligent and responsible with your finances by paying your bills on time. Late bill payments can negatively impact your credit score. When you apply for a loan, it should be used for revenue generating things such as acquiring key employee or new equipment.

Establishing credit takes time. Review your business credit report at least once a year so you know what others are seeing about your business.

Remember to:

  • Check your business credit report regularly and verify that the information is accurate.
  • Establish business credit with companies that report trades. Not all business creditors report their trade information.
  • Pay your creditors on time. Historical payment patterns with previous creditors is a major factor in determining your business credit score.

If you need to build business credit, first make sure your personal credit is in the best shape possible. The Complete System to Repair Your Credit and Boost Your Credit Score will provide you with all the tools necessary so you can start to establish credit. Download Today!