Basics of Business Credit

How to Build Business Credit

A Step-by-Step Guide to Establishing Business Credit

Many small businesses rely on business credit to help finance the purchase of new machinery, acquire inventory, and expand their operations. Even recurring costs like payroll can be covered by short-term loans. Most lenders require assurances that they’ll be repaid on time, and one way they help determine repayment risk is by reviewing the business’s credit scores and ratings on file with the major reporting agencies. These indicators can help banks determine whether or not to lend money and at what interest rates.

In addition, many businesses’ business credit files are evaluated when they bid on contracts or shop their services to potential business partners. Companies want to make sure they are working with associate businesses that can deliver products on time or complete projects as promised – and have a low risk of going out of business.

There are several ways companies can benefit from strong business credit scores and ratings, including:

  • More favorable lending terms from banks
  • Higher trade credit limits from suppliers or vendors
  • Lower insurance premiums
  • Better lease terms for real estate and machinery

What is a Business Credit File?

A business credit file can contain basic information about a company, as well as multiple business credit scores and ratings and payment history. This information may be used by others, which may include potential lenders, suppliers, or partners, to help demonstrate a company’s financial stability and credibility. In the case of Dun & Bradstreet, data points can be gathered from public sources like financial statements, legal judgments, news reports, and more.

Getting Started with Business Credit

How can you potentially build strong business credit scores and ratings? Part of it comes down to your ability to repay debts, but there’s more to the process than making on-time payments. Here are several best practices that may be able to help you build your company's business credit file:

1. Establish Your Business as a Separate Entity

Ideally, business owners think about credit before they start a company. That’s because a business’s structure can affect how lenders or potential business partners judge its credit outlook. Corporations and Limited Liability Corporations (LLCs) exist as independent entities and, generally speaking, are blank slates when it comes to establishing initial business credit scores and ratings. This separation of owner and enterprise is often the best approach when looking to establish your business credit.

On the other hand, sole proprietors may find that lenders and potential business partners may prefer to rely on their personal credit score to help assess the business. Because of this both past and future oversights on your personal accounts could affect financing or contracting opportunities for your company.

2. Register for a Dun & Bradstreet D-U-N-S® Number

The D-U-N-S Number is a unique identifier for your business, and it’s available for free from Dun & Bradstreet. This will be the number some lenders and potential business partners use to check your business’s credit profile, so you want to have it available before applying for a loan.

3. Get an Employer Identification Number From the IRS

An Employer Identification Number (EIN) is required to file your company’s taxes. Banks and potential business partners can also request it when you fill out paperwork. You can apply for a free EIN on the IRS website.

4. Open a Bank Account for Your Business

In the interest of establishing your business’s independent identity, you’ll want to use a business bank account for company purposes. A business account can also help you build a track record with the bank. If and when you do apply for credit, you’ll come to them as an existing customer. Note that a business bank account is different than a business credit card. Your company’s bank account should be in the business’s name. Many business credit cards still hold the individual cardholder responsible for debts, so these transactions may not impact your business’s credit scores and ratings.

5. Make On-time Payments

Lenders want to know that they’ll get a return on their investment, and potential business partners want to know that you’re reliable. Your business should strive to make all payments on time (or early) in order to help avoid the appearance of financial stress on your business credit profile. Failure to pay creditors can lead them to submit negative reports to the business credit bureaus. A history of delays or defaults can damage your ability to obtain credit or to prove your credibility to another company.

6. Ask Vendors to Supply Trade References to Dun & Bradstreet

Most businesses purchase goods from vendors in order to provide their end product or service. Suppliers often extend trade credit to their business customers, requiring full payment by a specific date.

While many new business owners may think of traditional loans as a primary form of credit, trade credit can be one of the most valuable means of business financing. You don’t have to pay upon delivery and making on-time payments to suppliers can help establish a record of responsible financial behavior.

If your business is meeting its obligations to vendors, you should ask these companies to report your payment history to credit agencies as a Trade Reference.* Payment experiences from Trade References are subject to Dun & Bradstreet's verification process and can be weighted in the calculation of many business credit scores and ratings, including Dun & Bradstreet's PAYDEX® Score.

A new business may not have previous bank loans to refer to when applying for credit, but payment experiences with vendors can serve much the same purpose and can reflect a good payment history. A record of responsible financial behavior can work in your favor.

7. Monitor Your Business Credit Scores and Ratings

Building your business credit file isn’t a one-and-done operation. New information can negatively or positively affect your scores and ratings.

In order to help avoid unpleasant surprises, business owners should regularly check their company’s scores and ratings with a service like Dun & Bradstreet’s CreditBuilder Plus*. Those who are looking for a free solution can subscribe to CreditSignal®  and receive alerts when some of their Dun & Bradstreet credit scores and ratings change.

How Long Does It Take to Build Business Credit?

There’s no standard amount of time for establishing a business credit file. The steps above are important, but there are many variables that can affect your business credit scores and ratings. These include your company’s financial performance, whether suppliers report Trade References to a business credit bureau, and how much information is available to the bureaus.

The size of a business isn’t usually a direct factor in how long it takes to establish business credit. However, public companies with a high profile may present a more data-rich target for the business credit bureaus. No matter the size of your company, the basics of building business credit are the same.

Business Credit vs. Personal Credit

While both business credit and personal credit seek to paint a picture of financial responsibility, they are separate and distinct. Assuming your business exists as its own entity, its credit scores and ratings will apply to the company and not to its owners or officers. Conversely, a personal credit file is designed to measure the creditworthiness of an individual. You can learn more about personal credit versus business credit in our Resources section.

Building your small business’s credit scores and ratings isn’t something that can be done overnight. Responsible business owners should work to establish and maintain reputable scores and ratings to help put their best foot forward when a lender or potential business partner accesses their business credit report.

*Trade References will be added subject to Dun & Bradstreet verification and acceptance. Dun & Bradstreet cannot guarantee that trade references will be accepted or that accepted trade references will impact your business credit file. Please see for eligibility, process, and other information regarding Trade References.

CreditSignal only shows certain of your Dun & Bradstreet scores for 14 days, then provides directional changes to such scores. It also indicates the number of individual request(s) for information, which may include but is not limited to credit information, by a unique external customer(s) on a D‑U‑N‑S® Number. To view additional scores and ratings, view scores and ratings following the 14 day period, or learn about what industries are making such requests, we recommend that you upgrade to one of our paid credit monitoring or credit building solutions.

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