Building Business Credit
How to build a credit profile in your business's own name, and why your personal credit still matters.
Your personal credit score follows you everywhere. Your business can have its own credit file too, kept by business credit bureaus, that suppliers, lenders, and even some insurers check.
A strong business file can mean better supplier terms and more financing options. It does not happen automatically, though. You build it on purpose, one on-time payment at a time.
The business credit bureaus
| Bureau | Common score | What it emphasizes |
|---|---|---|
| Dun & Bradstreet | PAYDEX (1 to 100) | How promptly you pay suppliers; 80 means paying on time |
| Experian Business | Intelliscore Plus | Payment history, credit use, public records |
| Equifax Business | Business credit risk and payment scores | Payment behavior and likelihood of serious delinquency |
PAYDEX in one line
On Dun & Bradstreet's scale, 80 means payments are generally made within terms, and higher scores mean paying early. Paying a net-30 bill in 30 days earns an 80.
Building your file, step by step
- 1
Form the business properly
An LLC or corporation separates the business legally. See Choosing a Business Structure.
- 2
Get an EIN
An Employer Identification Number from the IRS is free and identifies your business for taxes and credit.
- 3
Open a business bank account
Run all business money through it. Clean deposits also help when lenders review statements. See Separate Your Money.
- 4
Get a D-U-N-S number
Dun & Bradstreet issues this free identifier, which starts your D&B file.
- 5
Keep your details consistent
Use the exact same legal name, address, and phone everywhere: state filings, bank, vendors, and online listings.
- 6
Open trade lines that report
Ask suppliers offering net-30 terms whether they report payments to business bureaus. Buy what you need and pay on time or early.
- 7
Add a business card, used lightly
A business credit card that reports to business bureaus can add history. Keep balances low and pay in full when you can.
Personal credit still matters
For newer and smaller businesses, many lenders and providers check the owner's personal credit, because the business file is thin. Keep your personal credit healthy too: pay on time, keep card balances low, and check your reports for errors.
Expect to sign a personal guarantee on many small-business loans and some other financing. It means you promise to repay personally if the business cannot, which can put personal assets at risk even if you have an LLC. Read guarantees carefully and understand what they cover before you sign.
Myth or fact? Tap to flip
Business credit starter checklist
0/8 doneWords to know
- EIN
- A federal tax ID number the IRS issues to identify a business.
- D-U-N-S number
- A unique nine-digit identifier Dun & Bradstreet assigns to a business.
- Trade line
- A credit account with a supplier, such as net-30 payment terms, that can be reported to bureaus.
- Personal guarantee
- A promise by the owner to repay business debt personally if the business does not.
Finished reading?
Track your progress through Stage 3: Fund.
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