How To Build Your Business Credit

Building your business credit should be on top of your priorities as you run and grow your small business. Solid business credit can show banks and other potential partner businesses that your company is financially healthy and stable.

And In this article, we’re sharing the importance of business credit and how you can start building it right away.

Understanding Business Credit And Its Importance

Financially speaking, business credit is a major indicator of how reliable and healthy your business is. It refers to the summary of your company’s financial history, indicating its ability to repay its loans and other financial responsibilities.

Like personal credit, business credit is a significant financial tool that helps your company thrive. It’s primarily used to help you qualify for loans and other financing options. It’s also an essential tool for establishing relationships with other businesses and vendors. And not only that, but it can also serve as a useful negotiation or bargaining tool when entering into service and price discussions with other businesses.

So, without a business credit, your business will struggle to apply for credit cards, find loans, and build relationships with vendors to help it succeed.

4 Tips To Build Your Business Credit

Now that you know the importance of business credit, it’s time to learn how to build it. We share some tips to get you started.

  1. Use Business Tradelines

Tradelines for business, also known as trade information or trade references, are credit amounts that appear on business credit reports. Business tradelines can help your business to build credit. It shows other businesses and financial institutions to determine your business’s creditworthiness.

With personal credit reports, you have personal tradelines for your loans and credit cards. However, for business credit reports, there are two types of business tradelines:

  • Vendor Tradelines

A vendor tradeline is also known as merchant or supplier tradelines. These are the net payment accounts you have with vendors or suppliers.

A prime example is a net-30 account. With this type of account, you have 30 days to pay an invoice, and vendors report how much credit you used and whether or not you made your payments on time. Check out this list of net 30 accounts with credit reporting to help you build business credit.

  • Financial Tradelines

A financial tradeline refers to tradelines that a credit union, bank, or financial institution reports. This type of tradeline illustrates your business’s history of acquiring, repaying, or missing payments on financial products such as loans, credit cards, leases, and more.


  1. Build Business Foundation

To establish your business credit, you need to properly set up your business. If you have a startup, then it can take time to set up your business to appear reliable and professional to lenders, clients, and other businesses.

To build your business foundation, follow the steps below:

  • You should obtain an employer identification number (EIN). It acts as a social security number for your business.
  • You have to form a limited liability company (LLC) or incorporate your business: This ensures that your personal and business credit will be separate.
  • Get A D-U-N-S number: This nine-digit number is used to identify the physical location of your business.
  • Open A Business Bank Account
  • Get A Dedicated Business Phone Line

Your EIN and D-U-N-S numbers are particularly important since business credit bureaus use these to identify your company’s financial activities and payments.

  1. Open And Use Your Business Credit Card

Using a business credit card is another good starting point to build your business credit. You can open a credit card for your company and then use it every month for purchasing business essentials or paying vendors.

Consider looking for a credit card type that suits your business needs. Some business credit cards can offer rewards programs and benefits that are more helpful to business owners than personal credit cards.

Take note, however, that your credit limit may be low when you’ve just started your business. However, as you build your credit score, your limit also increases.

  1. Always Pay On Time

One of the most important tips to build good business credit is simply to pay your bills on time. It is the most basic concept behind credit building.

When your bill comes due, pay it promptly. By doing so, you’re showing that you are financially responsible and can make good on your loans and debts. If you pay your bills early, you can build your business credit even faster.

Take Away

A business credit score is critical to creating a financially viable business. It comes with numerous benefits, such as getting the upper hand during negotiations and winning favorable loan terms.

That said, it can take time to build your small business’s credit. Thus, it’s best to start early. So, make sure to follow the above tips and establish a strong business credit that can help your company succeed.