How to Build Business Credit from Scratch

Business credit is separate from personal credit, and most small business owners do not have any. Building business credit takes time and intentional effort, but it opens doors: larger credit lines, better terms, and eventually, financing that does not require a personal guarantee.

Here is a realistic roadmap for building business credit from zero.

Why Business Credit Matters

Strong business credit provides tangible benefits:

Separate from personal: Business issues do not affect personal credit (and vice versa)
Higher credit limits: Business credit lines can be larger than personal cards
Better loan terms: Strong business credit can improve rates and terms
Vendor relationships: Some suppliers require business credit to extend trade terms
Reduced personal liability: Eventually may qualify for loans without personal guarantee

Reality Check

Building meaningful business credit takes 1-2 years minimum. Most small businesses under $2M revenue will still need personal guarantees for major loans regardless of business credit.

Business Credit vs. Personal Credit

Key differences between business and personal credit:

Factor	Personal Credit	Business Credit
Score range	300-850 (FICO)	0-100 (PAYDEX), 1-100 (Experian)
Primary bureaus	Experian, Equifax, TransUnion	D&B, Experian Business, Equifax Business
Payment history	Late payments hurt for 7 years	More recent data weighted heavily
Public access	Requires your permission	Anyone can pull your business credit
Score impact	Inquiries affect score	Generally no inquiry impact

Step 1: Establish Your Business Identity

Before you can build credit, your business needs to exist as a separate legal entity:

Form an LLC or corporation: Sole proprietorships cannot build separate business credit
Get an EIN: Your business needs its own tax ID, not your SSN
Open a business bank account: Separate from personal accounts
Get a dedicated business phone: Listed under the business name
Establish a business address: Can be virtual, but should be consistent

Consistency is Critical

Use the exact same business name, address, and phone on everything. Inconsistencies across documents create multiple incomplete profiles in credit bureau databases.

Step 2: Get a D-U-N-S Number

Dun & Bradstreet (D&B) is the dominant business credit bureau. You need a D-U-N-S number to start building credit with them:

Free to obtain: Apply at dnb.com (ignore upsells for paid services)
Takes 30 days: Processing time for new numbers
Nine-digit identifier: Your unique business identifier
Required by some vendors: Government contracts, large suppliers

Step 3: Open Starter Trade Accounts

Trade accounts are credit lines from vendors who report to business credit bureaus. Start with vendors that approve new businesses:

Office supplies: Uline, Quill, Grainger report to D&B
Shipping: UPS and FedEx business accounts
Tech supplies: Dell business accounts
Fleet cards: WEX, Fuelman for vehicle expenses
Net-30 accounts: Many wholesalers offer Net-30 terms

Starter accounts typically offer $500-$2,000 credit limits. The amounts do not matter much; what matters is establishing payment history.

Verify Reporting

Not all vendors report to credit bureaus. Before opening accounts, confirm they report to D&B, Experian Business, or Equifax Business. Unreported accounts do not build credit.

Step 4: Get a Business Credit Card

Business credit cards build credit and provide purchasing flexibility:

Secured cards: If you cannot qualify for unsecured, start with secured ($500-$1,000 deposit)
Store cards: Office Depot, Staples business cards are easier to get
Major issuers: Chase Ink, American Express Business, Capital One Spark
Credit unions: Often more flexible for new businesses

Most business credit cards require a personal guarantee initially. The card still reports to business bureaus, building your business credit history.

Step 5: Pay Early, Not Just On Time

Business credit scoring rewards early payment:

D&B PAYDEX: Score of 80 requires paying on time. Score of 100 requires paying 30 days early.
Experian Intelliscore: Weights payment promptness heavily
Practical approach: Pay invoices when received, not when due

Set Up Auto-Pay

Automate payments to all trade accounts and credit cards. A single late payment can significantly damage your business credit score.

Step 6: Monitor Your Business Credit

Track your progress across all three major business bureaus:

Bureau	Score Type	How to Access
Dun & Bradstreet	PAYDEX (0-100)	dnb.com (free basic, paid monitoring)
Experian Business	Intelliscore (1-100)	experian.com/business (paid)
Equifax Business	Business Credit Risk Score	equifax.com/business (paid)
Nav.com	All bureaus	Free basic reports, paid for full access

Timeline: What to Expect

Building business credit is a marathon, not a sprint:

Timeline	Milestone	Score Range
Month 1-3	D-U-N-S obtained, first trade accounts opened	No score yet
Month 3-6	Trade accounts reporting, first PAYDEX appears	PAYDEX 50-70
Month 6-12	Multiple accounts established, payment history building	PAYDEX 70-80
Year 1-2	Strong payment history, higher credit limits	PAYDEX 80-90
Year 2+	Mature credit profile, may qualify for unsecured financing	PAYDEX 90-100

Common Business Credit Mistakes

Avoid these errors that stall business credit building:

Using personal credit: Mixing personal and business accounts prevents separation
Inconsistent information: Different addresses or names create fragmented profiles
Ignoring small accounts: Even $500 accounts contribute to payment history
Late payments: One late payment can drop your score significantly
Not monitoring: Errors happen; check reports regularly
Expecting instant results: This takes time; be patient

How Lenders Use Business Credit

Different lenders weight business credit differently:

SBA lenders: Check business credit but personal credit matters more
Bank term loans: Consider business credit as one factor among many
Lines of credit: Business credit history helps with larger lines
Trade credit: Vendors check D&B before extending Net-30 terms
Equipment financing: May rely heavily on business credit for larger deals

Personal Credit Still Matters

For most small business loans, personal credit remains the primary factor. Strong business credit is a plus, but weak personal credit will still cause problems.

Advanced Strategies

Once you have basic business credit established:

Increase credit limits: Request increases on existing accounts after 6-12 months
Add larger trade lines: Work with vendors who report higher credit limits
Get a business line of credit: Even a small one builds credit
Consider tier-2 business cards: After building history, apply for premium cards
Report rent payments: Services like Creditsafe can report commercial lease payments

When Business Credit Really Helps

Business credit makes the biggest difference for:

Government contracting: Many contracts require D&B rating
Large vendor relationships: Fortune 500 companies check business credit
Equipment leasing: Strong credit enables better lease terms
Larger businesses: Companies over $5M revenue get more benefit
Future financing: Builds foundation for eventually reducing personal guarantees

Action Checklist

Follow this sequence to build business credit:

[ ] Form LLC or corporation (if not already done)
[ ] Obtain EIN from IRS
[ ] Open dedicated business bank account
[ ] Get business phone number
[ ] Apply for D-U-N-S number at dnb.com
[ ] Open 2-3 starter trade accounts (Net-30 vendors)
[ ] Apply for business credit card
[ ] Set up auto-pay on all accounts
[ ] Sign up for credit monitoring (Nav.com or similar)
[ ] Pay all invoices early (not just on time)
[ ] Review credit reports quarterly
[ ] Request credit limit increases after 6-12 months