Building Business Credit

Strong business credit helps you qualify for better loan terms, lower insurance rates, and higher credit limits — without using your personal credit. Building it takes 6-12 months of deliberate effort.

Business Credit vs Personal Credit

Business credit is tied to your EIN (not SSN). It's reported to Dun & Bradstreet (Paydex), Experian Business, and Equifax Business — not to personal credit bureaus (Equifax, Experian, TransUnion). Business credit scores range from 0-100 (D&B Paydex), 1-100 (Experian Intelliscore Plus), and 101-992 (Equifax Business).

Steps to Build Business Credit

1. Form a legal entity: LLC or corporation. Sole proprietorships can't build business credit (they report under your SSN).
2. Get an EIN: Required for all business credit applications.
3. Open a business bank account: In your business name, with your EIN.
4. Get a DUNS number: Free from Dun & Bradstreet at dnb.com. This is the most commonly used business credit identifier.
5. Establish trade credit: Apply for Net-30 accounts with suppliers who report to business bureaus. Top options: Uline, Quill, Grainger, Home Depot Pro, Staples, Amazon Business. Make small purchases and pay early or on time.
6. Get a business credit card: Start with a card that reports to business bureaus. Capital One Spark, American Express, Chase Ink all report business credit activity.
7. Monitor your business credit reports: Check D&B CreditSignal (free alerts), Experian Business (free credit report preview), and Nav (small business credit monitoring).

Timeline

• Month 1-3: Register entity, get EIN, DUNS, bank account. First Net-30 trade line.
• Month 4-6: 2-3 trade lines reporting. Apply for business credit card.
• Month 7-12: 5+ trade lines. Apply for business line of credit.
• Year 2+: Qualify for SBA loans, equipment financing, and higher credit limits.

Business Credit Scoring Factors

• Payment history (35%): Pay early or on time. Late payments hurt more than personal credit.
• Credit utilization (30%): Keep under 30% of available credit.
• Credit history length (15%): Older accounts are better.
• Company size/financials (10%): Revenue, employees, years in business.
• Public records (10%): Liens, judgments, bankruptcies are very damaging.

Differences from Personal Credit

• No equal credit opportunity act — lenders can deny based on industry risk.
• No free annual credit report requirement (you must pay or subscribe).
• Business credit scores update monthly (not continuously).
• Negative information stays longer (7 years vs personal's 7 for most items).
• Personal guarantee may still be required for new businesses (you're personally liable if the business defaults).