How to Establish Business Credit

Just like you have personal credit, your business has business credit. Business Credit is all credit available to a business. This can come in many forms, including credit that does not require a Personal Guarantee (PG) and some business credit that does.

With a PG, your personal assets are on the line.

You will always need your EIN to apply and use business credit, and in many cases, you’ll need your SSN to verify your identity.

How Long Does It Take to Build Business Credit?

Establishing business credit is a process, but it doesn’t have to take forever. You’ll often see that it takes three years for a business to build credit. While being in business for that long can be helpful, you can build a strong small business credit profile and score much sooner.

To start establishing business credit, you will need to determine what type of vendor credit card you will need.

But first, here’s how to build business credit:

Step 1 – Build Your Fundability Foundation™

The first step in building business credit is to set up your business Fundability™. As a small business owner, you need to get all your licenses, open a business bank account, and set up a credit profile with each of the bureaus to be Fundable in the eyes of lenders and credit issuers.

You will also need to get your personal finances in order. That means obtaining your personal credit report and ensuring your personal credit score is as high as possible. A good personal credit score can help you build a strong business credit score.

A key part of setting up a strong business credit foundation – a Fundability Foundation™ – is separating business and personal credit. Incorporating, having a separate business address, and a dedicated business phone number will help.

A professional business website with an email address matching your domain is also crucial. Example: info@yourfavoritewealthstrategist.com

Building Fundability™ means you are establishing credibility for your business, giving lenders, customers, and prospects reasons to trust you.

Step 2 – Incorporate Your Business

To start building business credit, there needs to be an entity separate from you. The only kind of business entity that truly does this is a corporation.

Incorporating involves paperwork and fees. Check with your Secretary of State’s office for details.

The two main types of corporations to consider are:

• C-Corporation: Profits are taxed at the corporate level, and dividends are taxed again at the shareholder level. No restrictions on the number of shareholders.

• S-Corporation: Profits (or losses) pass through to shareholders and are only taxed at the personal level. Limited to 100 shareholders.

Step 3 – Get All Identification Numbers

To build a business credit score, stop using your Social Security number on credit and loan applications. Instead, use your EIN (Employer Identification Number).

An EIN is required for:

• Small business loan applications

• Business tax filings

EINs are free and available through the IRS website.

You also need a DUNS number from Dun & Bradstreet, which is required to start getting a business credit score. The application is simple and free.

Step 4 – Set Up with Business Credit Reporting Bureaus

Once you have your DUNS number, set up your account with Dun & Bradstreet. Providing as much business information as possible helps establish credibility.

D&B is the largest business credit reporting agency. Once you set up with them, Experian and Equifax will check D&B’s records and follow suit.

Check your records with Equifax and Experian once you receive your DUNS number to ensure accuracy and fix any errors immediately.

Step 5 – Keep Business Details Consistent Everywhere

Ensure your business name and address are consistent across all platforms, including your website and official registration documents. Even minor discrepancies (e.g., using "&" instead of "and") can lead to application rejections.

Copy and paste your business details whenever possible to avoid inconsistencies. Review your business information annually to correct errors.

Step 6 – Apply for Starter Credit

Some vendors offer credit even if you don’t have a business credit score yet. These lenders don’t require proof of cash flow or prior business loans but do require a business bank account.

Ensure these vendors report your payment history to business credit bureaus. A stellar payment history is crucial as it is the most significant factor in calculating your business credit scores.

Step 7 – Monitor Your Credit Regularly

Errors in your business credit reports can harm your scores and prevent you from obtaining good credit. Regularly monitoring your credit ensures:

• Payment history is accurate

• Credit utilization is in order

• Business credit scores are improving

Unlike personal credit, businesses are not entitled to free credit reports annually. Regular monitoring can be expensive, but platforms like Credit Suite via Bureau Insights™ provide cost-effective solutions to track business data from major credit bureaus.

Ensuring your business credit score is accurate and well-maintained is a key part of building business credit.