9 Ways to Build Business Credit In 2023 (2023)

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Just how important is your business credit score? Having a strong credit score can improve your eligibility for small business loans and business insurance, and it may also improve the price you pay to your suppliers. Working to build business credit can help your company thrive and can give you greater opportunities for future expansions.

Here are some strategies that you can use to improve your business credit profile.

What Is a Business Credit Score?

A business credit score measures how well your business has handled its past financial commitments. Lenders and business partners will use this score to determine the business’s eligibility for the best rates and terms on business loans and other contracts.

Unlike your personal credit score, which ranges from 300 to 850, your business credit score can be evaluated on one of two scales: 1 to 100 and 101 to 992.

A low credit score isn’t always the result of late bill payments. For instance, it can take time for a new business to establish business credit. That’s why it’s important for business owners to monitor their business credit reports and take steps to build business credit.

Ways to Build Business Credit

There are no shortcuts when it comes to building your business credit. Still, every business owner can use the following strategies to improve their business credit profile.

1. Establish Your Business

Many entrepreneurs have experienced the awkward startup phase of owning a business. But make sure you cover all of your details. This means you should take the time to:

These steps won’t necessarily build your business credit right away, but they can give your business a greater sense of legitimacy with your clients as well as your lenders.

This step is foundational to all the others. Establishing a professional business identity early on can make it easier to secure affordable bank loans and selectively work with vendors who report to major credit bureaus.

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🤔 Are you struggling to come up with a name for your business? This guide to choosing a business name will teach you how to create an appealing name for your business.

2. Open a Business Bank Account

In the early days of your business, it may be tempting to use your personal assets to cover a few business expenses. But this is unwise. It can make it more challenging to sort out your personal and business expenses during tax season. But more significantly, using your personal finances will prevent you from building your business credit profile.

Instead, open a dedicated business bank account as soon as possible. Using this account for all of your business expenses will help you build credit faster.

Most local banks and traditional financial institutions can offer business services. For best results, select a bank that reports data to the major commercial credit bureaus.

3. Register Your Business

Business owners should expect to register their businesses with their state. This will require you to declare your legal structure. By default, your business will be classified as a sole proprietorship, but you can also structure your business as a:

  • Partnership (requires one or more business partners)
  • Limited liability company (LLC)
  • Corporation

Each of these has advantages and challenges of its own. The U.S. Small Business Administration site can help you choose the right structure for your business.

It’s not uncommon for some organizations to conduct business under a fictitious business name. If you’re a sole proprietor, you can register a doing-business-as (DBA) business name with your state.

You’ll also need to obtain an employer identification number (EIN) from the IRS. Depending on your industry, you may be required to obtain licenses and permits to operate.

All of this information will become a matter of public record, which allows business credit agencies to start developing your business credit profile.

9 Ways to Build Business Credit In 2023

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4. Apply for a DUNS Number

You can get a DUNS number online, which will identify your business with the commercial credit reporting agency Dun & Bradstreet. Your business may already have a DUNS number, but if not, you can request one for free. This ensures that your business will be monitored by a major business credit bureau, which can help you build credit.

Other credit reporting agencies — including Equifax, Experian, and Creditsafe — will have numerical identifiers of their own. You won’t have to submit a request to ensure that you’re visible to these agencies.

5. Make Purchases with a Business Credit Card

One of the fastest ways to build business credit is through a business credit card. Assuming you pay the balance on time, you’ll build credit each time you use the card.

If you’ve already opened a business bank account, your financial institution will likely have options for a business credit card. You may even be able to benefit from reward points, cash back, or other incentives.

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Just be cautious about how you use your credit card. Late payments can hurt your credit score, but so can your credit utilization ratio. This is the total of all your credit balances divided by all your credit limits. Said a different way, it’s the percentage of your monthly credit limit that you’re using. If you consistently keep your balance over 25% to 30% of your credit limit, you can harm your business credit.

To keep your credit utilization low, consider opening multiple business credit cards (though no more than two to three). This will allow you to juggle expenses between accounts, making you less likely to exceed this 25–30% threshold.

6. Keep Track of Your Monthly Bills

Nothing hurts your credit score like late payments. Sure, everyone knows how important it is to pay their bills on time, but first-time entrepreneurs can quickly become overwhelmed by the sheer number of professional responsibilities, allowing certain expenses to slip through the cracks. Even a payment made a day or two late can reduce your credit score.

Set aside a day on the calendar on which you pay all of your bills at once. Ideally, aim for a day at least a week before the final deadline, which can give you a buffer if you need to send physical checks through the mail.

You can also speed up the process by setting up automatic payments with your business bank account. This ensures that you’ll always make your recurring payments and avoid late fees and dings on your business credit score. But make sure that you account for these payments, or you could overdraft and face other penalties.

7. Rely on Suppliers that Report to Major Business Credit Bureaus

Whenever possible, work with suppliers, vendors, and financial institutions who report to the major credit bureaus. By doing so, you’ll have a better chance that your timely bill payments will be recorded on your credit report, which can contribute to good business credit.

Keep in mind that not every vendor or bank will report directly to these institutions. If you’re looking to build business credit, you may want to select business relationships that align with this goal.

When in doubt, ask your vendor or bank if they report to a commercial credit bureau. and which one. Try to aim for at least two to three vendor and business accounts that directly connect to a major credit reporting agency.

8. Use a Business Loan

Using small business loans can help you build your credit score. As with any loan, you’ll want to borrow carefully, invest the money wisely, and make all payments on time.

(Video) How To Build Business Credit (UPDATED 2023)

If you just launched your business, you may still be able to secure business loans through a nontraditional credit history. Ask your lender if you can submit records of bill payments or other financial documents to establish your creditworthiness. You’ll then be able to start building credit the traditional way once you repay the loan.

You can also look into loans guaranteed by the government’s Small Business Administration.

If you don’t need financing and your priority is building your business credit score, look into Credit Strong’s credit-builder loans for businesses.

9. Monitor Your Business Credit Score

One of the easiest ways to build business credit is by correcting errors on your business credit report. You can receive a free business credit report each year from the major business credit bureaus:

  • Experian
  • Equifax
  • Dun & Bradstreet

Checking your business credit won’t hurt your score if you only pull your report once each year. As a business owner, make a habit of performing an annual checkup to assess your business’s financial health.

If you discover an error in your credit history, report it immediately to the bureau that supplied the report. Erasing that error may vastly improve your business credit score. Remember that errors can take time to fully disappear from these reports, which is why it’s important to locate and report errors as soon as possible.

How Long Does It Take to Build Business Credit?

Building strong business credit doesn’t happen overnight. If you’ve just launched your company, it may take roughly a year before you develop a strong credit profile. Established businesses that practice these strategies might see improvements after a year.

Watch Your Numbers Carefully

The importance of your business credit score can’t be overstated. But by adopting a few basic strategies, you’ll be in a great position to build or improve your business credit, which can help you secure the financing you need to launch, maintain, or grow your business.

FAQs

What is the fastest way to build business credit? ›

Here's a step-by-step guide to building your business credit.
  1. Register your business and get an EIN. ...
  2. Apply for a DUNS number. ...
  3. Open a business credit card. ...
  4. Establish trade lines with your suppliers. ...
  5. Pay creditors early. ...
  6. Borrow from lenders that report to credit bureaus. ...
  7. Avoid judgments and liens.
Sep 9, 2022

Do you need a DUNS number to build business credit? ›

Apply for business credit

One of the first steps you'll want to take is to register for a Dun & Bradstreet number, or DUNS number. A DUNS number is a unique nine-digit identification number for each physical location of your business. Dun & Bradstreet also offers guidance on how to build business credit.

How to build business credit with ein number? ›

If you want to build business credit quickly here are five simple steps.
  1. Step 1 – Choose the Right Business Structure. ...
  2. Step 2 – Obtain a Federal Tax ID Number (EIN) ...
  3. Step 3 – Open a Business Bank Account. ...
  4. Step 4 – Establish Credit with Vendors/Suppliers Who Report. ...
  5. Step 5 – Monitor Your Business Credit Reports.
Dec 5, 2019

How do I use my Ein number for credit? ›

How Do I Use My EIN Number To Apply for a Credit Card? Some credit card applications ask for an EIN by default, while others ask for a SSN. If you're applying for a credit card and the application asks for your SSN, you can usually substitute your EIN number without a problem.

How to get a 100 business credit score? ›

  1. Legally Register Your Business.
  2. Get a Business Credit Card or Banking Account.
  3. Work With Vendors Who Report Payments.
  4. Pay Your Bills on Time.
  5. Use Net Income To Finance Your Debt Obligations.
  6. Check Your Score Periodically.
Apr 22, 2022

How quick can you get a business line of credit? ›

Turnaround times vary by lender, and it can take as little as five minutes or as long as several days to get a decision. Your lender may also require you to provide additional documentation after reviewing your application.

What is a good DUNS score? ›

To be eligible for loans and decent credit ratings, this particular score should fall within the 80 to 100 range. Anything lower than that may indicate difficulty with making payments. Businesses within the 0 to 49 range are considered high risk and would dissuade investors or lenders.

How do I get business credit with EIN or DUNS number? ›

  1. Establish Your Business as a Separate Entity. ...
  2. Register for a Dun & Bradstreet D-U-N-S® Number. ...
  3. Get an Employer Identification Number From the IRS. ...
  4. Open a Bank Account for Your Business. ...
  5. Make On-time Payments. ...
  6. Ask Vendors to Supply Your Payment History to Dun & Bradstreet. ...
  7. Monitor Your Business Credit Scores and Ratings.

How much does a DUNS number cost? ›

Obtaining a DUNS number is absolutely Free for all entities doing business with the Federal government. This includes grant and cooperative agreement applicants/prospective applicants and Federal contractors.

Should I use my SSN or EIN for business credit? ›

SSNs typically provide card issuers with a personal guarantee that the cardholder can be held accountable for any business card-related debt. Using an EIN instead will place the business itself as the liable entity, not the cardholder.

Can I get a credit card under an EIN number? ›

Yes, you can get a business credit card with just your EIN number, but there are fewer options available than those business credit cards that require an SSN.

Can I get a loan with a EIN number? ›

Can I Get a Loan with Just My Business EIN? Yes, there are certain circumstances where a lender will not use your personal credit score, but only your EIN as a factor in lending to you. Note that they won't just use your EIN in isolation, as there are many factors that go into qualifying for a small business loan.

Is my EIN linked to my SSN? ›

An EIN is not linked or associated with your SSN. As such, it provides additional personal privacy protection by using a different number than your SSN for reporting purposes. You can easily apply online for the EIN through the IRS. In addition to privacy, there are other advantages to obtain an EIN.

How do I find out what my business credit score is? ›

Like Equifax, Experian also offers either a one-time report and scores or the option to subscribe to ongoing monitoring. For $39.95, you can pull one business credit report and see your Experian business credit scores. For ongoing access to both your reports and scores, you can pay $179 a year.

Can I open a business account with just my EIN number? ›

You can open a business bank account once you've gotten your federal EIN. Most business bank accounts offer perks that don't come with a standard personal bank account. Protection. Business banking offers limited personal liability protection by keeping your business funds separate from your personal funds.

What's the highest business credit score? ›

Business Credit Risk Score

Businesses are ranked on a scale between 101 to 992, with a lower score correlating to a higher risk of delinquency.

How much business credit do you need to get a loan? ›

Banks and credit unions: A credit score of 700 or higher is ideal for a bank or credit union business loan. If you can reach a score of 740 or higher, you'll likely get approved for the best terms the lender offers. SBA lenders: Aim for a credit score in the mid-600s to qualify for an SBA term loan.

What is the starting point for business credit score? ›

Unlike consumer credit scores that follow a standard scoring algorithm and range from 300 to 850, business credit scores generally range from 0 to 100.

Is it easier to get business credit with LLC? ›

Getting Financing for Your LLC

One of the biggest benefits of establishing credit for your LLC is the ability to get access to more financing options. Some lenders simply won't lend to sole proprietorships; your business must be its own legal entity.

How fast can you get a credit card for your LLC? ›

If you applied online, most credit card companies will mail your card within seven to 14 business days. Once you receive your business card, activate it and start using it wisely.

Can I withdraw cash from business line of credit? ›

Whereas a term loan offers a lump sum upfront with a repayment schedule, a business line of credit allows you to withdraw funds as needed. You can withdraw up to the credit limit and once you repay the amount you've borrowed, you can withdraw funds again.

What is a 49 PAYDEX score? ›

1 to 49: Considered a high-risk score, businesses with a score in this range made payments as late as 90 days or later. 50 to 79: Considered a medium-risk score, businesses with a score in this range made payments up to 30 days late.

How do I get a 90 PAYDEX score? ›

3 Tips to Boost Your PAYDEX® Score
  1. Pay your bills early. Since your PAYDEX® Score is directly related to your payment history, paying bills as early as possible is the best way to improve it. ...
  2. Monitor your credit regularly. ...
  3. Keep your credit active.

Does an LLC have its own credit score? ›

Does an LLC Have Its Own Credit Score With The Rating Agencies? Yes, a business has its own credit score and credit report. When you start your business and start applying for credit, your personal credit history and score will be taken into account.

What is a high business credit score on DUNS number? ›

PAYDEX® Score

Dun & Bradstreet assigns scores on a scale of 1 to 100, with 100 being the best possible PAYDEX Score. Scores are divided into three Risk Categories, with 0 to 49 indicating a high risk of late payment, 50 to 79 indicating a moderate risk, and 80 to 100 indicating a low risk.

Does a business automatically get a DUNS number? ›

While your Social Security number is assigned to you by the U.S. government at birth, a DUNS number must be requested from the private business credit reporting agency Dun & Bradstreet. Business owners may establish their own DUNS number.

What is the difference between a DUNS number and EIN? ›

EIN numbers, or federal tax IDs, are issued by the IRS for tax purposes, while DUNS numbers are issued by Dun & Bradstreet. DUNS numbers also remain the same for the entire life of the business, while EIN numbers can change.

How soon should I get a DUNS number? ›

Requesting the number by phone can be accomplished in 24-48 hours, however, if requesting a DUNS # online it will take 30-60 days. Be prepared to provide the following information:  Company legal business.  Trade style, doing business, or other name by which your entity is commonly recognized.

What do I do after I get my DUNS number? ›

To get started, make sure to use your DUNS number to apply for business credit cards, loans, small business line of credit, and other types of financing. You also need to make sure to pay all of your bills on time and in full to maintain a high credit score.

How long does a DUNS number last? ›

DUNS numbers do not expire. In fact, your unique number will remain with your company even if you go out of business.

Can I use my SSN as my EIN for an LLC? ›

Taxpayer Identification Number

For federal income tax purposes, a single-member LLC classified as a disregarded entity generally must use the owner's social security number (SSN) or employer identification number (EIN) for all information returns and reporting related to income tax.

What is the easiest business gas card to get? ›

The easiest business gas credit card to get is likely a secured credit card, student card, or a fuel card that's issued in a partnership between a card issuer and a gas station brand. These types of cards typically have lower credit score requirements, but could still offer rewards for gas purchases.

Is it best to use your business name when applying for your EIN? ›

Should I Form My LLC Before Getting My EIN? We recommend you form your LLC before you get your EIN. One of the main reasons is that when you apply for your EIN, the IRS application asks you to submit the approved legal name of your business and the date it was formed.

Can a business get a credit card without a Social Security number? ›

If you don't have a Social Security number to provide, you can still apply for a business credit card. First, you'll need to file for an individual taxpayer identification number, or ITIN. The IRS issues these to foreign nationals who need taxpayer identification but aren't eligible for a Social Security number.

Can I get a business credit card as a 1099? ›

Very often the answer is yes; you can get a business credit card if you are self-employed, operate your business as a sole proprietor or freelancer, or if you are a 1099 contractor.

How do I apply for a business credit card without using my SSN? ›

To get a business credit card without a social security number you're going to need to get an individual taxpayer identification number (ITIN) as well as an employer identification number (EIN). Capital One and American Express are two companies that allow you to use an ITIN to apply for their business credit cards.

What bank can I open with EIN? ›

In short - no, you can't open a business bank account with only an EIN. Your EIN is the unique nine-digit identity code assigned to your business by the IRS.

Is it easier to get a business loan with an EIN? ›

If you're a small business owner in need of capital, having an EIN will make it easier to qualify for financing. Since it's simple, and free, to get one, there really aren't any downsides to applying for an EIN.

How to get a loan in your business name? ›

You can apply for a small-business loan through banks, credit unions, SBA lenders, online lenders, as well as through some nonprofit organizations. The right option for you will depend on a variety of factors, including your funding needs and qualifications.

Do you need an EIN if you are self employed? ›

Answer: A sole proprietor without employees and who doesn't file any excise or pension plan tax returns doesn't need an EIN (but can get one). In this instance, the sole proprietor uses his or her social security number (instead of an EIN) as the taxpayer identification number.

Do I file taxes with EIN and SSN? ›

A Social Security Number (SSN) is an acceptable Tax ID for a Sole Proprietorship; however, there are instances when obtaining an Employer Identification Number (EIN), is required or recommended, particularly if the business owner wishes to engage in certain types of business activities.

Can I lookup my EIN online? ›

Can I look up an EIN number? The IRS doesn't provide a public database you can use to look up EIN numbers for your own company or others. However, you can look at your EIN confirmation letter or other places your number may be recorded, including previously filed tax returns or old financing documents.

What are the three business credit scores? ›

Dun & Bradstreet, Experian and Equifax are the “big three” business credit bureaus that generate business credit reports. However, each commercial credit bureau looks at the information they gather in a slightly different way, which can make understanding business credit reports a bit confusing.

How much is a good business credit score? ›

Businesses are ranked on a scale between 101 to 992, with a lower score correlating to a higher risk of delinquency. A good Business Credit Risk Score is around 700 or higher.

What is poor business credit score? ›

Dun & Bradstreet PAYDEX
Paydex Range:Rating:
80 – 100Good
50 – 79Fair
0 – 49Bad

Does my LLC need an EIN to open a bank account? ›

Details you'll need to apply online:

Name and address of business. Business tax ID number: Business Employer Identification Number (EIN) provided by the IRS in the following 9-digit format XX-XXXXXXX, or, if the LLC is a single member LLC, the EIN of the company or the Social Security Number (SSN) of the single member.

How many bank accounts should a small business have? ›

The United States Small Business Administration recommends opening one or more business bank accounts to keep business funds separate from your personal funds. There are many benefits to doing this, including features that benefit businesses specifically. These features aren't often available through personal accounts.

Can you buy a business and keep the same EIN? ›

Generally, businesses need a new EIN when their ownership or structure has changed. Although changing the name of your business does not require you to obtain a new EIN, you may wish to visit the Business Name Change page to find out what actions are required if you change the name of your business.

Can you build business credit in 2 months? ›

It may take a few months before new accounts appear on your business credit reports. Once they do, you'll need several months of on-time payments to establish a good business credit score.

What is a good credit score for a business? ›

Businesses are ranked on a scale between 101 to 992, with a lower score correlating to a higher risk of delinquency. A good Business Credit Risk Score is around 700 or higher.

Can I start a business with a 700 credit score? ›

Banks and credit unions: A credit score of 700 or higher is ideal for a bank or credit union business loan. If you can reach a score of 740 or higher, you'll likely get approved for the best terms the lender offers. SBA lenders: Aim for a credit score in the mid-600s to qualify for an SBA term loan.

How to get a 700 credit score in 2 months? ›

Here's what you need to do.
  1. Make every payment on time. ...
  2. Keep your credit utilization low. ...
  3. Don't close old accounts. ...
  4. Pay off credit card balances. ...
  5. Ask your card issuer to increase your limit. ...
  6. Use the authorized user strategy. ...
  7. Put your bill payments to work. ...
  8. Use a rent reporting company.

How long does it take to build credit as a new LLC? ›

Experts say it can take three years or more to build business credit, but some creditors may only require one year. If you're trying to establish credit for a new business, these steps can help you get started.

What does a new business credit score start with? ›

Unlike consumer credit scores that follow a standard scoring algorithm and range from 300 to 850, business credit scores generally range from 0 to 100.

Can I get a loan with ein? ›

Can I Use My EIN Instead of My SSN When Applying for Credit? Once you have an EIN, you can use it when applying for everything from business credit cards to short-term loans. While some lenders allow you to apply with just an EIN, if the lender requires a personal guarantee it will also request a SSN.

How hard is it to get a $10,000 business loan? ›

Getting a $10,000 business loan can be easier than larger amounts, since you pose less of a risk to the lender. But you might want to steer clear of big banks and look to less-conventional lenders for funding of this size.

Can a newly formed LLC get a credit card? ›

In addition to business checking and savings accounts, many LLC owners open business credit cards. One of the biggest misconceptions surrounding LLCs is that your business must be incorporated to be eligible for a business credit card. That's simply not true.

What is a good D&B number? ›

Types of D&B ratings

To be eligible for loans and decent credit ratings, this particular score should fall within the 80 to 100 range. Anything lower than that may indicate difficulty with making payments. Businesses within the 0 to 49 range are considered high risk and would dissuade investors or lenders.

Does a business get its own credit score? ›

Businesses don't have one credit score; they have several. Each of the three major business credit bureaus — Dun & Bradstreet, Equifax, and Experian — calculates and issues unique business credit scores based on their own criteria and algorithms.

How much of a business loan can I get with a 700 credit score? ›

You can borrow $50,000 - $100,000+ with a 700 credit score. The exact amount of money you will get depends on other factors besides your credit score, such as your income, your employment status, the type of loan you get, and even the lender.

Can I get $50,000 loan with 700 credit score? ›

You will likely need a minimum credit score of 660 for a $50,000 personal loan. Most lenders that offer personal loans of $50,000 or more require fair credit or better for approval, along with enough income to afford the monthly payments.

Do I need a good credit score to start an LLC? ›

You do not need good credit to start a business. In fact, there is no requirement that a business use credit at all. However, for some business models, credit will be essential. Early on, creditors will use your personal credit history in determining the terms of any credit they offer the business.

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