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How to build business credit

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A step-by-step guide to establishing business credit, plus how to check your rating at the three major bureaus.

One of the major things you can do to help your company’s financial future is establish and build your business credit. With good credit, you can get better loan terms and lower interest rates.

What is business credit?

Business credit is a number that represents a company’s ability to borrow money. This means that if a company wants to take out a loan, the lender will consider its business credit as one of the determining factors when making a decision on the application. If approved, it also affects the interest rate you qualify for.

How to build and establish business credit

  1. Establish your business entity. The first step to getting your business credit is to legally separate your personal finances from that of your business. You can do this by establishing a limited liability company (LLC), a C corporation or an S corporation.
  2. Get a federal tax identification number (EIN). This number acts like a Social Security number for your business. Banks require this number when you apply for a business credit card in the name of your corporation or LLC.
  3. Open a bank account. You’ll need to get a business checking account and make sure you pay all business expenses from this account. Some banks offer bonuses when you merge your credit card rewards with a business checking or savings account.
  4. Get a business address and phone number. This will help you solidify your business as a separate entity. To establish your business credit, you’ll want your company to be listed in directories such as the Better Business Bureau, Yellow Pages and Local.com. And with a business phone number, you’ll establish a trade credit relationship with your phone line, which will be reported to the credit bureaus.
  5. Open a business credit file. You can do this at the three largest business credit bureaus to keep building your credit.
  6. Get a business credit card. Get a credit card that reports to the business credit agencies and start making payments. This is one of the major steps in improving your business credit.
  7. Establish tradelines with vendors and suppliers. Work with your suppliers and vendors to establish relationships and build your credit. You can also ask them to report your payments to a business credit bureau. Dun & Bradstreet needs at least three tradelines to give you a Paydex score.
  8. Pay on time. Late payments negatively affect your business credit. To avoid that, set alerts or automate your credit card payments. And if you pay early and in full, Dun & Bradstreet will likely assign you a perfect score.
  9. Borrow from lenders that report to credit bureaus. If you’ve got a perfect payment history, working with lenders that report to business credit bureaus can further help you establish your business credit.
  10. Keep your business information updated. Make sure you update your information at all three of the largest business credit bureaus, since you don’t know which bureau a lender will pull your credit from.
  11. Keep your public record clean. Aside from payment history, credit bureaus keep public records, such as bankruptcies, liens and judgments. These records can stain your business credit for up to 10 years.
  12. Borrow responsibly. Try not to borrow more than you can pay off. Same goes for your credit card limit — don’t use it all at once if you can’t pay it off. With timely payments and responsible borrowing practices, your business credit will improve.
  13. Watch your credit utilization ratio. High credit utilization can lower your business credit score. Having a credit utilization ratio under 30% is generally considered favorable.

How does a business credit card affect business credit?

Most of your credit-building endeavors will revolve around paying your suppliers and vendors, paying your bills and borrowing from lenders. The easiest and most convenient way to manage this is to get a good credit card for your business needs.

With most business credit cards, you can:

  • Automate your payments
  • Set payment alerts
  • Manage and track your spending and the spending of your employees

Some business credit cards offer specific perks and features that can also help you build your credit, such as:

  • A 0% intro APR period on balance transfers, purchases or both
  • Payment flexibility with up to a 60-day grace period
Is my small business ready for a corporate card?

Compare business credit cards

Updated November 17th, 2018
Name Product APR (Annual Percentage Rate) for Purchases Introductory Purchase APR Annual Fee
None (Charge Card)
$450
New cardholders can earn 75,000 Membership Rewards® bonus points by spending $10,000 on purchases for the first 50,000 points and then another $10,000 for the next 25,000 points on their new card in the first 3 months.
None (Charge Card)
$0 annual fee for the first year ($250 thereafter)
This charge card gives you the option to pay in full each month or to carry a balance for up to 60 days with no interest.
16.24%, 20.24% or 24.24% variable
$295
Earn Membership Rewards® points after you spend in qualifying purchases on the card within your first months of card membership.
14.24%, 19.24% or 21.24% variable
0% for the first 9 months (then 14.24%, 19.24% or 21.24% variable)
$0
Save on interest with a 0% intro APR on purchases for 9 months; after that your APR will be 14.24% - 21.24% variable.
15.24% to 21.24% variable
0% for the first 12 months (then 15.24% to 21.24% variable)
$0
$500 bonus cash back after you spend $3,000 in the first 3 months.
17.99% to 22.99% variable
$95
80,000 bonus points after you spend $5,000 on purchases in the first 3 months after account opening. That's $1,000 toward travel rewards when you redeem through Chase Ultimate Rewards®.
17.99% to 24.99% variable
$0 annual fee for the first year ($99 thereafter)
75,000 Bonus points after you spend $3,000 on purchases in your first 3 months from your account opening with your Marriott Rewards Premier Business credit card.
24.74% variable
$0
Get the credit you want for your business, and unlimited 1% cash back on every purchase, every day.
14.74%, 18.74% or 22.74% variable
0% for the first 9 months (then 14.74%, 18.74% or 22.74% variable)
$0
Unlimited 1.5X miles per dollar on every purchase, every day.
18.74% variable
$0 annual fee for the first year ($95 thereafter)
Unlimited 2 miles per dollar on every purchase, every day.
14.74%, 18.74% or 22.74% variable
0% for the first 9 months (then 14.74%, 18.74% or 22.74% variable)
$0
Unlimited 1.5 cash back on every purchase, every day.
18.74% variable
$0 annual fee for the first year ($95 thereafter)
Unlimited 2% cash back from Spark Cash could mean thousands of dollars each year going back into your business. No minimum to redeem.
17.99% to 24.99% variable
$0 annual fee for the first year ($95 thereafter)
50,000 bonus miles after you spend $3,000 on purchases in the first 3 months your account is open.
17.99% to 24.99% variable
0% for the first 9 months (then 17.99% to 24.99% variable)
$99
Earn 2x points on Southwest® purchases and 1x point on all other purchases. Plus 6,000 anniversary bonus points.
17.99% to 25.99% variable
$0 annual fee for the first year ($99 thereafter)
For a limited time, earn 70,000 American Airlines AAdvantage® bonus miles after making $4,000 in purchases within the first 4 months of account opening.
13.24% to 23.24% variable
0% for the first 9 billing cycles (then 13.24% to 23.24% variable)
$0
Earn up to 3% cash back on business purchases with the Business Advantage Cash Rewards Mastercard® credit card.

Compare up to 4 providers

Compare top Citizens Bank business cards

Who scores my business credit?

There are multiple agencies that keep your credit score, but the largest three are:

  • Dun & Bradstreet. In addition to the business score — which they call Paydex score — Dun & Bradstreet includes a credit recommendation to the lender. To get the Paydex score, you must have a D-U-N-S number, which is free to get at the bureau’s website.
  • Equifax. This bureau offers two scores to the lender: the business credit risk score and the business failure score. The scores are meant to evaluate the risk of your company and its chance of failing within the next year.
  • Experian. With this credit agency, your company only gets one business score, which ranges from 0 to 100. The higher your score, the better your company will look in the eyes of the lender.
    • Can a business credit card damage my business credit?

      If you’re not careful, you can damage your business credit with your business credit card. This can happen when you:

      • Fail to make timely payments
      • Default on your business credit card
      • Carry too much debt
      • Apply for too many business credit cards in a short period of time

      Why is it important to have good business credit?

      With good business credit you’ll get:

      • Better payment terms with vendors and suppliers
      • Lower interest rates from lenders and banks
      • Higher credit limits when applying for a credit card or loan

      How to check your business credit rating

      To check your business credit rating, you need to:

      1. Visit one of the business credit bureaus’ websites.
      2. Find your company. On the Dun & Bradstreet website, you need to provide your company’s D-U-N-S number, while on Experian and Equifax you only need to provide your business name and location.
      3. Purchase the report.

      • The Experian basic report costs $39.95
      • The Dun & Bradstreet basic report costs $61.99
      • The Equifax basic report costs $99.99

      Why you should monitor your business’s credit reports

      Your business credit is one of the primary factors that banks and lenders take into consideration. That’s why you need to constantly keep an eye out for errors and fraudulent activity.

      1. Check if the same error is shown on all three credit bureau reports.
      2. Next, check if the data is accurate or if it’s indeed an error.
      3. If it is an error, reach out to the bureaus that list it and explain the issue.
      4. Provide proof that supports your claim.

      Bottom line

      Your business credit can determine whether you’ll get approved for a loan or credit card for your company as well as its interest rate. This is why you should start building your credit as soon as you start your company and continually strive to improve it. If you notice something’s amiss, contact the credit agencies and ask that the error be corrected.

      If you follow these steps for building and establishing your credit, you’ll likely be able to score lower interest rates and better loan terms for your business.

Kliment Dukovski

Kliment Dukovski is a writer who specializes in global financial markets and personal finance, with a focus on credit cards. His main goal is to deliver honest and accurate information to help you make the right financial decision. When he's not writing about finance-related subjects, he writes sci-fi stories.

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