Many small business owners use their personal credit for everything. But building separate business credit protects your personal finances and opens doors to better financing options. Here’s how to build business credit from the ground up.
Get your paperwork in order first
Before you can build business credit, you need to establish your business legally. Register your business with your state and get an Employer Identification Number (EIN) from the IRS. This is free and takes just a few minutes online.
Choose a business structure like LLC or corporation rather than operating as a sole proprietorship. Credit agencies view formal business structures as more credible. Open a business bank account using your EIN, not your Social Security number.
Get a business phone number that’s separate from your personal line. Credit agencies check this information, and having dedicated business contact details makes you look more established.
Register with business credit agencies
Unlike personal credit, you need to actively register with business credit bureaus. The three main agencies are Dun & Bradstreet, Experian Business, and Equifax Business.
Start with Dun & Bradstreet since many lenders check their database first. Create a free business profile and get your DUNS number. This unique identifier helps track your business credit activity.
Register with Experian Business and Equifax Business next. Each agency tracks different information, so you want to be in all their systems. The registration process is usually free, though they’ll try to sell you additional services.
Make sure all your business information is consistent across agencies. Use the same business name, address, and phone number everywhere.
Start with vendor credit accounts
Vendor credit is often the easiest way to begin building business credit. These are accounts with suppliers who report your payment history to credit agencies.
Look for vendors that specifically mention they report to business credit bureaus. Office supply stores, telecommunications companies, and fuel suppliers often offer this. Uline, Quill, and FedEx are examples of vendors that report payment history.
Start small with orders you can easily pay. The goal is establishing a track record of on-time payments, not getting maximum credit limits. Pay every bill early or exactly on time. Late payments hurt your credit score significantly.
Keep detailed records of all vendor payments. Sometimes vendors make reporting mistakes, and you’ll need documentation to dispute errors.
Get a business credit card
Once you have some vendor credit established, apply for a business credit card. This adds a revolving credit account to your profile, which strengthens your credit mix.
Look for cards designed for new businesses with no annual fee. Capital One Spark, Chase Ink, and Wells Fargo Business cards are good options for building credit.
Use the card regularly for small business purchases, but keep balances low. Credit utilization should stay below 30% of your credit limit, and paying it off completely each month is even better.
Set up automatic payments to ensure you never miss a due date. Payment history is the most important factor in your credit score.
Monitor your business credit reports
Check your business credit reports regularly to make sure information is accurate and up to date. Unlike personal credit reports, business credit reports aren’t free, but the cost is usually under $100 per year.
Look for errors in your business information, payment history, or account details. Dispute any mistakes immediately. Credit agencies are required to investigate disputes within 30 days.
Watch for signs that vendors aren’t reporting as promised. If you’ve been making payments for months but don’t see accounts on your report, contact the vendor to confirm they’re actually reporting.
Build your credit profile gradually
Business credit takes time to develop. Focus on consistency rather than speed. Make every payment on time, every time. This builds the foundation for a strong credit score.
Add new credit accounts gradually as your business grows. Don’t apply for multiple accounts at once, as this can make you look desperate for credit.
Keep old accounts open even if you don’t use them much. Length of credit history helps your score, so closing old accounts can hurt your rating.
Separate business and personal finances completely
Never mix business and personal expenses once you start building business credit. Use business accounts and credit cards only for business purchases. This separation protects your personal credit and makes your business look more professional to lenders.
Pay business expenses from business accounts, and pay yourself a salary from the business rather than treating business money as personal funds.
Final thoughts
Building business credit takes patience, but it’s worth the effort. Good business credit gives you access to larger credit lines, better interest rates, and financing options that don’t require personal guarantees.
Start with the basics and build slowly. Within 12-18 months of consistent effort, you should have a solid foundation. After two to three years, you’ll likely qualify for significant business financing based solely on your business credit profile.
Remember that business credit never stops being important. Continue monitoring your reports and maintaining good payment habits as your business grows. Strong business credit becomes increasingly valuable as your financing needs expand.