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7 Steps to Build Business Credit

Written by Banks Editorial Team
6 min. read
Written by Banks Editorial Team
6 min. read

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Business credit can open the door to many funding opportunities. Whether it’s loans, credit cards, or lines of credit, you can leverage these added resources to help foster expansion in your company without impacting cash flow.

If you haven’t started building business credit yet, this guide will walk you through a proven seven-step process to begin building your business credit profile.

National Business Capital - Business Loans
SBA, Term and Working Capital Loans to grow your Business. Fast Funding with Affordable Rates if you need immediate Working Capital. Get a dedicated Business Finance Advisor.

What is Business Credit?

In short, business credit is a term used to describe an entity’s ability to purchase goods or services now and pay for them in the future. Credit card companies and lenders let businesses borrow credit via credit lines.

However, lenders don’t give business credit to everyone. Before letting you borrow money, financial institutions take a look at your business credit score and personal credit score. Both of these figures give a lender more information about your ability to manage debt. Business owners with higher credit scores get access to more business credit and better terms. Basically, business credit is the resource you obtain if you have a good business credit score.

Why Is It Important to Build Business Credit?

Establishing good business credit as a small business owner is vital if you want to grow your company but need additional capital to cover expansion costs.

Many lenders review your business’s financial information when you apply for a business loan or credit card. If your personal and business credit history is up to par, and you have a good business credit score and personal score, you’ll likely qualify for favorable terms on debt products. Conversely, lower scores or little to no credit history could result in higher borrowing costs or denials in some instances.

Borrowing costs will impact your profit margins and ability to expand your company. For example, if you take out a $100,000 loan with 15 years on the term, the difference between a 5% interest rate and a 10% interest rate is almost $300/mo. That $300/mo can cover part of a worker’s salary. If your average employee earns $30/hr, getting the lower interest rate can net 10 free hours of labor. Instead of allocating those funds to interest, you can put them back into your workers and other parts of your business.

Saving close to $300/mo adds up, especially over a 15-year business loan. Securing that type of discount lets you save over $50,000 for the life of the loan. Like the idea of saving $50,000 on your loan? Scenarios like that become possible if you build business credit over time. Getting stuck with a higher interest rate, like 15%, will increase your expenses and restrict your ability to use the capital for your business.

7 Simple Steps to Build Your Business Credit

It’s always good to build credit for your business. Companies that don’t need loans now may need them in the future. You may want to buy a commercial property, scale your equipment purchases, or bring more workers on your team. Loans provide immediate solutions to these problems, and their monthly payment plans make them doable.

It’s easy to put off business credit building and wait until you need a loan, but this would be a big mistake. Even if you have never had financial challenges for your company, lenders will still assess you based on your business credit score. While other factors determine the loan amount and interest rate, your credit score plays a critical role. When you’re ready to start building credit for your business, follow this seven-step process:

1. Register Your Business

Visit the Secretary of State’s website to register your business. You’ll need to provide essential details and information about your business and its structure (i.e., sole proprietorship, partnership, or corporation).

2. Get a Federal Tax ID Number (EIN)

Apply for your federal tax identification number or employer identification number (EIN) from The process takes around 15 minutes, and the EIN will appear on the screen once you’ve completed the questionnaire.

3. Open Business Bank Accounts

It’s never a good idea to mix personal finances and business finances. You’ll need to open a business bank account – either a business checking account, business savings account, or both – to keep your company’s finances separate. Keeping funds separate makes tax season easier and protects your personal assets from company liabilities (i.e. if a customer sues your company). You will have to turn your company into a limited liability company (LLC) to get this protection.

National Business Capital - Business Loans
SBA, Term and Working Capital Loans to grow your Business. Fast Funding with Affordable Rates if you need immediate Working Capital. Get a dedicated Business Finance Advisor.

4. Borrow from Lenders

Apply for loans or credit card products with lenders or creditors who report to the credit bureaus. You can also reach out to your bank or credit union to learn more about business loans, credit cards, or lines of credit that may be available to you.

It’s important to look at a lender’s requirements before submitting an application. Most financial institutions, credit unions, and online lenders use hard credit inquiries to check your creditworthiness. Hard credit checks give lenders more information about your ability to repay debt, but each hard inquiry will reduce your credit score by a few points. A few hard credit checks won’t make much of a difference, but if you rack up too many of them, they can add up quickly.

Also, consider online lenders like National Business Capital, which offer flexible business funding options. You can get financing much quicker with an online lender like National Business Capital than through a traditional bank.

Whether you’re interested in a small business loan, line of credit, U.S. Small Business Administration (SBA) loan, or equipment financing, they have you covered. Enquire today about the options they have waiting for you by submitting an inquiry using the online form. It’s fast, free, and won’t impact your credit score.

Business credit cards are another way to build a solid credit rating for your company. Plus, some feature interest-free introductory periods (on purchases), cashback rewards, and travel perks that reward you for everyday purchases. Of course, you’ll need a good or excellent personal credit rating to qualify in most instances, but if you opt for a business credit card that caters to consumers with lower credit scores, expect a steep APR.

Trade lines coupled with business loans and credit card products can help you build business credit fast, assuming you manage the accounts responsibly and make timely payments. If you’re currently doing business with suppliers or vendors, request to open trade lines if your account activity is reported to the business credit agencies. (You can do the same for entities you’re planning to do business with in the near future).

5. Pay Your Creditors on Time

Payment history is the most important component of your business credit score. You’ll want to send your payments before the due date to avoid late charges that can result in penalties and hurt your business credit rating. Losing points on your score due to late payments can hurt your ability to get good terms on future loans. If you fall far behind, lenders may reject your applications, and you may get stuck with undesirable financing options. 

Business owners should look at their budgets and consider the stability of their revenue before taking out loans. If you are not sure about your ability to repay a loan, a business line of credit can make sense for your company. You only pay interest when you borrow against the line of credit, and minimum payments are often generous before the expiration date. Of course, you’ll have higher monthly payments on the remaining balance after the credit line expires, but it can provide clarity and make it easier to stay on top of your minimum payments. 

It’s important to follow this step for your business and personal credit. Many lenders will also take a look at your personal credit score because the way you manage personal finances can tip them off on how you will manage your company’s finances. This extra research can help a lender determine if your personal debts are too much for you to cover business debts.

Lenders may also ask for your personal credit score if they request a personal guarantee. A personal guarantee makes you personally responsible for the loan’s repayment, effectively piercing the LLC bubble. Not all lenders ask business owners to make this personal guarantee. It’s usually for business owners with new companies, financial concerns, or bad credit history.

Regardless of why some lenders ask for your personal credit score, it’s important to show them a good number. Paying your creditors on time will help your business and personal credit scores, and you will also have less stress because you are trimming debt.

6. Ensure Your Record With Credit Bureaus Is Clean and Updated

Review your business credit profile and highlight any inaccuracies. File disputes right away to get them rectified so your business credit score rating is an accurate reflection of how your company manages outstanding debt obligations. Lenders will look at your company’s credit report when assessing your application. Getting a copy of this business credit file gives you insight into what a lender sees when they review your business.

If you haven’t yet applied for a Duns & Bradstreet business identifier (D-U-N-S number), now’s the time to do so. Duns & Bradstreet will then collect your company’s information and use it to generate credit reports and scores for your business. 

7. Monitor Your Credit

Most importantly, check up on your business credit report often to track your progress. Monitoring your business credit report will provide insight into the factors that impact your credit rating the most. Plus, you’ll spot errors if they arise even sooner, allowing you to work with the credit reporting agency and have them resolved promptly.

Monitoring your credit also keeps it top of mind. Business owners should track their credit scores similarly to how they track income and expenses. Founders that stay on top of their numbers can respond to situations in real-time and adjust accordingly. Applying those business skills to building credit can help you gain momentum and put you in a better position when you apply for your first or next business loan.

Credit building is a long-term journey. The loan is your payoff. A higher credit score entitles you to more choices and opportunities. Staying on top of your credit score leading up to a loan can help you get better terms. Then, if you make on-time payments for your business loan, you will see even more gains for your credit score.

National Business Capital - Business Loans
SBA, Term and Working Capital Loans to grow your Business. Fast Funding with Affordable Rates if you need immediate Working Capital. Get a dedicated Business Finance Advisor.

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