The Small Business Owner's Guide to Business Credit

Business credit is one of the most valuable assets your company can build — yet many business owners don't understand it or actively manage it. Strong business credit unlocks better financing terms, higher credit limits, and the ability to separate personal and business financial obligations.

This guide explains how business credit works, why it matters, and provides actionable steps to establish and improve your business credit profile.

What Is Business Credit?

Business credit is a measure of your company's creditworthiness, separate from your personal credit. Like personal credit, it's tracked by bureaus and used by lenders, suppliers, and others to assess risk.

• Business Credit Bureaus: Dun & Bradstreet, Experian Business, and Equifax Business track business credit.
• Business Credit Scores: Range from 0–100 (D&B PAYDEX) or use letter grades, unlike personal credit's 300–850 scale.
• Payment History: Primary factor is how you pay your bills — on time, early, or late.
• Credit Utilization: How much of your available credit you're using.
• Company Information: Age, size, industry, and public records also factor in.

Why Business Credit Matters

Building strong business credit provides significant advantages:

• Better Loan Terms: Lenders offer lower rates and higher limits to businesses with strong credit.
• Separate Liability: Access credit without personal guarantees in some cases.
• Supplier Credit: Establish net-30, net-60 terms with vendors.
• Business Insurance Rates: Some insurers check business credit when pricing policies.
• Contract Opportunities: Large companies and government agencies often check business credit.
• Sale of Business: Strong credit history increases business value.

How Business Credit Scores Work

Each bureau has its own scoring methodology:

Step 1: Establish Your Business Entity

Before you can build business credit, your business must exist as a legal entity:

• Incorporate or Form an LLC: Sole proprietorships struggle to separate business and personal credit.
• Get an EIN: Your Employer Identification Number is your business's Social Security number.
• Open a Business Bank Account: In your business name using your EIN.
• Get a Business Phone Number: Listed under your business name.
• Establish a Business Address: Ideally not a home address (virtual offices work).

Step 2: Register with Business Credit Bureaus

Ensure you have profiles with the major bureaus:

• D&B DUNS Number: Free registration at dnb.com. Required for government contracts and many B2B relationships.
• Experian Business: Created automatically when businesses report, but verify your profile.
• Equifax Business: Similar to Experian — verify your information is accurate.

Step 3: Establish Trade Lines

Trade lines are accounts that report to business credit bureaus. Start with these:

• Net-30 Vendor Accounts: Office supply companies, industrial suppliers, and specialty vendors often extend net-30 terms and report payments.
• Business Credit Cards: Cards that report to business bureaus (not all do — verify before applying).
• Credit Builder Programs: Some services specifically help establish business credit.
• Supplier Credit: Negotiate credit terms with your regular suppliers and ensure they report.

Start with 3–5 trade lines. Having multiple accounts reporting positive payment history builds your profile faster.

Step 4: Pay Early or On Time — Always

Payment history is the most important factor in business credit scores:

• Pay Early: D&B PAYDEX rewards early payment. Paying 30 days early can significantly boost scores.
• Never Miss Payments: Even one late payment can damage your business credit.
• Set Up Autopay: Eliminate the risk of forgetting payment deadlines.
• Track Due Dates: Create a calendar of all credit obligations.

Step 5: Monitor Your Business Credit

Regularly check your business credit reports:

• D&B CreditSignal: Free basic alerts from Dun & Bradstreet.
• Nav.com: Free business credit monitoring with scores from multiple bureaus.
• Direct Bureau Access: Paid subscriptions for complete reports.

Review reports quarterly at minimum. Dispute any errors immediately — they can take time to resolve.

Step 6: Gradually Increase Credit Lines

As you build history, expand your credit capacity:

• Request Credit Line Increases: After 6–12 months of positive history, request increases.
• Apply for Larger Accounts: Move to vendors with higher credit limits.
• Add Bank Credit Products: Business lines of credit and loans build business credit history.
• Maintain Low Utilization: Even with higher limits, keep usage below 30%.

Common Business Credit Mistakes

Avoid these errors that can hurt your business credit:

• Mixing Personal and Business Expenses: Weakens business credit profile.
• Applying for Too Much Credit at Once: Multiple inquiries can lower scores.
• Ignoring Disputes: Let errors on your report persist.
• Missing Payments: Even one late payment matters.
• Not Monitoring Reports: Unknown issues go unfixed.
• Only Using Personal Credit Cards: Business expenses on personal cards don't build business credit.

Timeline for Building Business Credit

Building strong business credit takes time. Here's a realistic timeline:

Next Steps

Start building your business credit today:

• Check your current status: Search for existing business credit reports.
• Get your DUNS number: Register free at dnb.com.
• Open 3–5 trade lines: Start with easy-approval net-30 accounts.
• Set up payment tracking: Ensure you never miss a due date.
• Monitor progress: Check reports quarterly.