How to Build Business Credit Fast

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 it can be helpful to be in business for that long, you can build a good small business credit profile and business credit score long before that.

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 for how to build business credit is to set up your business Fundability™. In practice, this means as a small business owner you will 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 their personal finances in order. That means getting your personal credit report and making sure your personal credit score is as good as it can be. Your personal credit score can help you build an even stronger business credit score, so pay close attention to it.

A big part of setting up a strong business credit foundation – a Fundability Foundation™ – is making sure that your business and personal credit are separated. Incorporating and having a separate business address and dedicated business phone number will help.

So does a separate, professional business website—with an email address that has the same domain name as your website. Example: [email protected]

Most importantly, building Fundability means you are building credibility for your business; giving lenders, customers, and prospects reasons to trust your business.

Step 2 – Incorporate Your Business

In order 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 will mean some paperwork, and it will inevitably mean fees of some sort. Check with your applicable Secretary of State’s office for the details.

The two main types of corporations you need to consider are a C-corporation and an S-corporation.

A C-corp is what we often think of when we think of corporations. C-corporation profits are taxed, and are reported on the corporation tax return.

Then, any after-tax profits distributed to shareholders as dividends are taxed again, and are reported by the shareholders on their personal tax returns.

But C-corps have no restrictions on the number of shareholders they can have.

S-corps cannot have more than 100 shareholders. With S-corporations, profits (or losses) are passed through the S corp. to the shareholders, and are only taxed to the shareholders and reported on their personal tax returns.

Step 3 – Get All Identification Numbers

Getting a business credit score means you have to stop using your Social Security number on your business credit card and loan applications. Instead, you want to use your EIN.

Small business loan applications will ask for your EIN, so it will save you time to get yours set up early, before you are in a rush and really need business credit and loans.

An EIN comes from the IRS website. They are easy to get, and they are free. Your EIN isn’t just useful for credit cards and loans. You will also need it for filing your business taxes. It is a number which is useful beyond the purpose of building business credit.

You also need to get a DUNS number from Dun & Bradstreet. This is another free number with an easy application process. You will need a DUNS number to start getting a business credit score from D&B. You will also need payment experiences. We’ll get to those in a moment.

Step 4 – Get Set Up With the Business Credit Reporting Bureaus

When you get your DUNS number, you should also set up your account with them as much as possible. Any information you can provide will only help you.

Dun & Bradstreet is also where you can send trade references, which are subjective pieces of information you can add to your business credit history. Otherwise, everything else in your business credit reports is objective information.

D&B is the largest business credit reporting agency, by far. Getting set up with them will get you set up with Experian and Equifax automatically, because they will check Dun & Bradstreet’s records and follow suit.

Once you receive your DUNS number, make sure to check Equifax and Experian to see if your business has a record with them yet. Once you have such a record, check it for accuracy, and move quickly to get any errors fixed as soon as possible.

Set up a reminder to check your records and business credit reports with these three CRAs every year, to be sure they are still correct and complete.

Step 5 – Keep Business Details Congruent Everywhere

All of your business details need to be correct. This means your business name and address on your website needs to perfectly match your business name and address on any registration papers you have filed with the Secretary of State.

Business credit card issuers, lenders, and any business credit reporting agency is not going to stop and think of all the myriad ways your business can be listed. Instead, if there’s a discrepancy, they will just mark your application as fraud and move on to the next application.

But it does not have to be that way. Your best bet is to copy and paste the information every time. And keep track of where your business information is, both online and offline. Check it at least once per year, as errors can creep in.

Even an ampersand (&) in place of the word ‘and’ will be enough for your application to be dismissed and rejected as fraud.

Step 6 – Apply for Starter Credit

There are vendors which will provide you with a credit card even if you don’t have a good business credit score yet. Yes, business owners don’t have to be building business credit to get a credit card or business line of credit from them.

You will not need to prove cash flow, and you do not have to have already qualified for a business loan.

They will, though, require that business owners have a business bank account. Here is where building Fundability™ makes a difference—and a business bank account is one facet of establishing Fundability.

You do, however, want to be sure they are reporting your payment history to one or more of the business credit reporting bureaus. Otherwise, you won’t be building a business credit score, no matter how well you manage a credit card from them.

And you want your payment history with them to be stellar, because it is the single most important factor in calculating your business credit scores. Good business credit scores will get you a business loan in the future.

Step 7 – Monitor Your Credit Regularly

Errors in your business credit reports are going to damage your business credit scores and keep you from getting good credit. And, of course, you want to be sure that all your efforts for building business credit are being reported, each with the right credit limit.

Since your personal credit score is a part of the calculation of your business credit score with Experian, it pays to check your personal credit reports as well. Make sure your payment history is right and your credit utilization is in order.

However, unlike with personal credit, you are not entitled to a free credit report every year. And monitoring each business credit score—which you need to be doing more than once per year anyway—can get expensive fast.

Fortunately, Credit Suite via the exclusive Bureau Insights™ product offers businesses access to see their business data from all three big business credit bureaus for a fraction of the cost of buying directly from each bureau.

Making sure each business credit score is right—and stays right—is a fundamental part of building business credit.

Different Types of Trade Credit

Business trade credit can be divided into five categories:

Vendor Credit

Retail Credit

Fleet Credit

Service Credit

Business Credit Cards

Vendor Credit

Vendor credit is when a vendor (a business that your business buys goods or services from) extends payment terms to a customer (you/your business). This is generally based upon the customer meeting certain criteria set by vendors themselves and sometimes underwriters or financial institutions.

Vendor credit is often made on net terms. This means the customer has a set number of days in which to pay. Net 30, for example, means the customer has 30 days to pay—and they have to pay the balance in full.

Contrast this with revolving credit terms, where a customer can pay some of the balance and carry over the remaining balance to the next month. Vendors will sometimes offer revolving terms.

Another aspect of vendor credit is that it’s only good for the vendor extending it. Unlike, say, a Visa card, vendor credit won’t be accepted anywhere but with the vendor.

Starter vendors are often where to apply for business credit if your business is a startup. Many of them do not require much time in business, or business credit history. And if you cannot meet either of those criteria, you may be able to instead offer a PG or secure your credit with a monetary deposit.

More About Fundability

Retail Credit

Retail credit is issued by retailers to buy their products and services. It is only good for the actual retailers issuing the credit (often, credit cards). Since such a business credit card tends to be ultimately issued by banks, your Social Security number will have to be on your credit application. This is in accordance with Federal law.

In general, you will need at least three reported business credit experiences (transactions) on your business credit report in order to qualify. There may be time in business and/or credit history or business revenue requirements. If you cannot meet some or all of those criteria, you may be able to instead offer a PG or secure your credit with a monetary deposit.

Terms can be either net or revolving.

Fleet Credit

Fleet credit comes from companies that issue credit for purchasing fuel, and the repair and maintenance of vehicles. Often, these are gas cards. Even businesses that don’t have large fleets of vehicles can still benefit from fleet credit.

There may be time in business and/or credit history or business revenue requirements. If you cannot meet some or all of those criteria, you may be able to instead offer a PG or secure your credit with a monetary deposit.

Since these cards tend to be ultimately issued by banks, your Social Security number will have to be on your credit application. This is in accordance with Federal law.

Terms can be either net or revolving.

Service Credit

Service credit is credit issued by a service provider to pay for their services only.

Since these credit cards tend to be ultimately issued by banks, your Social Security number will have to be on your credit application. This is in accordance with Federal law.

Terms can be either net or revolving.

Business Credit Cards

Business credit cards are payment cards issued by a vendor through or directly by a financial institution to users. Such a card enables a business to pay a merchant for goods and services. This is based on the business and/or the business owner’s promise to the card issuer to pay them for the amounts plus any other agreed charges.

Since this kind of business credit card is issued by banks, your Social Security number will have to be on your credit application. This is in accordance with Federal law.

Terms are usually revolving.

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What is Business Credit Used For?

What can business credit be used for? For businesses, credit can and is used for any purpose which requires the use of funds. Understanding when the small business should use business credit with or without a PG to run and grow your business can be truly powerful.

Trade and vendor credit can often be used to keep business debt from showing up on the entrepreneur’s personal credit.

However, it might make sense to save a PG when you apply and use business credit with a PG to grow and expand your small business.

Business credit should be used strategically to help manage cash flow and to help the business become more Fundable.

There is a science to using your personal credit in the right way at the right time. It helps to ensure that small business debt doesn't show on the personal credit reports and works to protect your personal credit.

The Day to Day Running of a Business

With a wide variety of business credit issuers, you can use business credit to fuel the daily running of your small business. You can often get trade and vendor credit without a PG. This can also make it possible for you to keep business expenses from reporting to your personal credit. Instead, it will keep the reporting of those business expenses on your business credit accounts. This helps to make sure business debts don’t show on your personal credit.

Growing a Business

It often makes sense to personally guarantee or leverage a personal credit check to access more advanced business credit accounts. This can often help you get higher limits on a business credit card or other accounts, and small business financing

Our Credit Line Hybrid program is a sequence of small business credit cards that leverage both business credit and personal credit to get up to $150,000 that can be used to hire new employees, grow your marketing, or otherwise expand your small business.

Strategically using business credit and personal credit together can open you up to more financing options beyond net 30 vendors.

How do I Build Business Credit Fast?

To build business credit fast, you need to know which business credit vendors will report to the business credit bureaus, so you don’t waste your time trying to work with those which don’t. It will also save time to get your business set up properly and gather all the information and documents which many vendors will want to see before they will approve you.

A third way to save time is to only apply to vendors where you know your business is most likely to be approved. If you’re wondering how to build business credit, the answer is to start small, and build your business credit score that way.

It pays to work with a business credit expert who keeps track of which vendors will report to the business credit bureaus. Furthermore, it helps even more when that expert diligently keeps track of changing requirements. Credit Suite does both.

The Business Credit Builder

The Credit Suite Business Credit Builder and Business Finance Suite can help you with build business credit by doing the heavy lifting for you. We have a team dedicated to finding and maintaining hundreds of business credit accounts. The Business Finance Suite will help you understand and improve your Fundability, establish your business credit profile, get business credit accounts, and even give you direct access to lending opportunities.

Business Credit Builder

Business Credit With and Without a Personal Guarantee

Credit issuers and lenders will ask for a PG when a business’s other Fundability Factors are not strong enough to support the credit decision without leveraging your personal credit.

You can still access hundreds of business credit accounts without a PG in the Credit Suite Business Credit Builder. Not using your PG to get business credit means that you can use it later when it matters most… Growing your small business.

The Credit Line Hybrid product leverages your personal credit or a credit partner’s personal credit for business credit card approvals up to $150,000 and 0% for 6-18 months. This is a great way to get cash in hand and still run your day to day operations without harming your personal credit or finances.

Business Credit Benefits

There are several benefits to building business credit and using it. Business credit building is a meaningful act which can help your business now and in the future. Here are some ways it can help you and your business succeed.

Boosting your overall Fundability™

Your business can qualify for more types of financing, at better rates and with better terms

Lower Insurance Premiums

A business credit file showing a history of paying on time can help lower your business insurance premiums

Separate your business from personal credit

Using business credit can lower your personal credit utilization which can raise your personal credit scores and even make your business more Fundable

Can get regardless of personal credit

Many vendors and trade accounts don’t require a personal guarantee so if you’re working on your personal credit you can build business credit at the same time

Better cash flow management

Using business credit to run your business, buy supplies, buy inventory, etc. can be done with net 30, 55, 60 terms or on revolving terms which allows you to get what you need now and pay later.

Business Valuation

Surprisingly having an established business credit profile can impact the value of your business. As you build business credit it can be easier to grow and a less risky business is more valuable!

Frequently Asked Questions

What is a Business Credit Bureau?

A business credit bureau is an agency that collects and researches data on businesses and sells it for a fee to lenders and credit issuers to make lending decisions. It may also be called a commercial business credit reporting agency, or a corporate credit bureau.

What is a Business Credit History?

A business credit history is the number of trade payment experiences which are reported on business credit reports. This includes payment terms.

What Does it Mean to Establish Business Tradelines?

Establishing business tradelines is the act of applying to and using accounts that report to the business credit bureaus.

What are Business Credit Reports?

These are reports produced by business credit bureaus highlighting a business foundation, and reporting business credit history, scores and ratings. These reports are compiled to help lenders and business owners access risk.

What Does it Mean to Build a Business Credit Profile?

A business credit profile is all the information included on all your business credit reports including all your business tradelines, business information, and business credit scores. Building your business credit profile means to improve accuracy and accumulate positive experiences and information which present your business in a favorable light.

What is a Personal Guarantee?

A personal guarantee is an individual’s legal promise to repay credit issued to a business where they are an owner, executive, or a partner.

With business credit agreements, giving a personal guarantee essentially makes you a co-signer on the business credit account. You will remain liable for any debts the business incurs. You have given a “personal guarantee” that you will be responsible for the debt.

In practice, this means that your personal credit will undergo a hard inquiry, since you are putting your Social Security number on the credit application. With enough hard inquiries, your personal credit score will be adversely affected.

What is a Trade Vendor?

A trade vendor is a vendor that issues trade credit, and trades product or services.

What is Trade Credit?

Trade credit is issued by vendors to businesses for the purchase of goods or services.

What is a Vendor Account?

A vendor account is an account issued to a business with a vendor. It is sometimes reported to the business credit bureaus. The term trade account is common, but it is more accurate to call this account a vendor account.

What are Business Tradelines?

Business tradelines are vendor accounts reported by the vendor to a business credit bureau. This information is included in a specific location in a business credit report.

What is a Trade Payment Experience?

When a businesses’ payment activity in relation to a new or continuously reported tradeline is recorded by a business credit bureau.

What Does Continuously Reported Mean?

A continuously reported business tradeline is one that is over 6 months old that has reported multiple payment experiences.

What Does the Term ‘Newly Reported Tradelines’ Mean?

A business tradeline is referred to as newly reported if it is up to 6 months old and has reported payment experiences.

What is an EIN?

EIN stands for Employer Identification Number. It is a nine-digit number assigned by the IRS, used to identify the tax accounts of employers and certain others with no employees. The IRS uses the number to identify taxpayers who are required to file various business tax returns. EINs are used by employers, sole proprietors, corporations, partnerships, nonprofit associations, trusts, estates of decedents, government agencies, certain individuals, and other business entities. Get your EIN for free directly from the IRS.

What are Hard Inquiries and Soft Personal Credit Inquiries?

A credit inquiry is when a lender pulls someone’s personal credit record. It creates a record in a credit report of each time the borrower, a lender or a potential lender gets a copy of a person’s credit report. Credit inquiries, especially multiple inquiries, may negatively impact credit scores.

Hard Inquiries
In a hard inquiry (also called a hard pull), a potential lender checks a person’s credit report. An occasional hard inquiry will only have a small negative impact on a credit score. But hard inquiries stay on a credit report for two years. Several hard inquiries over a long period will hurt a personal credit score the most. This is because they are viewed with suspicion, as they could signal the borrower has fallen on hard times.

Soft Inquiries
A soft inquiry (or soft pull) is a credit report check that does not affect a borrower’s credit score. Soft inquiries come from eval uations not resulting in the granting of credit. For example, you can check your own credit as much as you like without it affecting your score. Another type of soft pull is periodic checks by existing creditors. It’s also a soft inquiry when credit information is pulled by insurance companies while deciding whether to offer insurance. That’s right: business credit and underwriting go together.

Is There Such a Thing as a Business Credit Inquiry?

You may be wondering: do business credit inquiries hurt my credit? Unlike with personal credit, anyone can pull your business credit reports. This does result in inquiries.

However, unlike with personal credit, business credit inquiries don't negatively affect your Fundability or business credit scores with each business credit bureau.

What are NAICS Codes and SIC Codes?

NAICS (North American Industry Classification System) codes classify businesses by industry. As an example, a dry cleaning business would come under 812320 Drycleaning and Laundry Services (except Coin-Operated).

The NAICS codes are the standard used by Federal statistical agencies in classifying business establishments for the purpose of collecting, analyzing, and publishing statistical data related to the U.S. business economy.

The IRS also uses NAICS codes. While reviewing your business tax returns, the IRS will compare yours with other businesses in your industry, to make sure that your claimed deductions are sufficiently similar to those of your industrial peers.

Standard Industrial Classification (SIC) codes are four-digit numerical codes assigned by the U.S. government to business establishments to identify the primary business of the establishment.

SIC codes are being replaced by NAICS codes, but organizations such as Dun and Bradstreet still use SIC codes or even both.

Two of the bigger differences between SIC and NAICS codes are that the NAICS codes list is more detailed, and it does not differentiate between online and offline businesses.

What Are Business Credit Tiers?

Business credit tiers are actually Credit Suite terminology. Our business credit advisors continually check and recheck vendors and other credit and business financing issuers. There are differences in terms of how easy or difficult it is to be accepted for credit, and what you may need to provide to qualify.

For example, business credit tier 1 is vendor credit, where you need very little to get started. You can qualify with few payment experiences on your business credit reports. You may be able to qualify with a short time in business, such as six months. Or you may be able to get around certain more stringent requirements by offering a personal guarantee or making a deposit to secure the credit.

And to get to business credit tier 2, you will need to have at least three trade accounts reporting to the business credit bureaus.

What is a Business Credit Builder Program?

The Credit Suite Business Credit Builder and Business Finance Suite can help you build business credit by doing the heavy lifting for you. We have a team dedicated to finding and maintaining hundreds of business credit accounts. The Business Finance Suite will help you understand and improve your Fundability, establish your business credit profile, get business credit accounts, and even give you access directly to lending opportunities.

Companies that help build business credit, like Credit Suite, get business owners set up with business credit reporting agencies, and research business credit accounts which report to the business CRAs. Credit Suite knows when to apply for credit accounts, and which loans and cards to apply for, and in which order. This is to maximize approvals and minimize the time it takes to get and build business credit.

Business Credit vs Business Loan: Which is Better?

When it comes to financing your business, you may think that business credit and loans are 100% separate. But the truth is, they aren’t.

In particular, business owners with bad credit can have their good business credit help them get loans. After all, business credit is one of the 5 main Fundability principles. When a lending institution has more than just your personal credit scores to look at, they will review any other information which they believe will better answer their one big question: will you pay them back?

Because it’s possible to have good business credit with bad credit on the personal side. But if your business credit is good enough for a lender, they will weigh it more heavily in their decision.

Business Credit: How it Works When Seeking Loans
Lending institutions will let your business credit guide them as they pull your business credit reports and look for a few things.

Do you pay your bills on time?
Are there a lot of negative/derogatory items on your credit reports, such as lawsuits or liens?
How long have you been in business?
Is the business credible?
Does the information on the business credit report match the information received on the application?

If the answers to these questions satisfy the lending institution, then you’re more likely to get a loan, although it will not necessarily be for exactly the amount you were originally seeking.