The Definitive Guide to Building Business Credit

Brendan Harkness

Brendan Harkness

Updated Mar 04, 2019

Business credit is pretty much like personal credit, but for businesses.

If you understand how your personal credit and credit scores work, you’ll have a good idea of how business credit works too. But there are some important differences.

Business credit reports and scores are completely separate from personal reports and scores. However, lenders will typically check your personal credit when applying for loans, especially for small businesses.

Not all businesses have a credit history, just like not all people have a credit history. If a business hasn’t been around very long, isn’t listed in directories, or doesn’t have any trade lines with other merchants, there might not be any information to show in a report. And in some cases you might need to open a business credit file yourself with the bureaus.

Great business credit comes with a number of benefits, some of which could end up saving you a lot of money in the long run:

  • Small business loan approvals, and bigger loans overall
  • Access to business credit without a personal guarantee
  • Lower interest rates on loans, credit cards, and insurance
  • Landlords are more likely to lease property, like office space
  • Improved relationships with suppliers and merchants
  • Better overall reputation and image for the company

Keep reading to learn how business credit works, and how business credit scores are calculated. Or jump down to the actual steps you’ll need to take to establish a business credit file today and start building business credit.

What is Business Credit?

Business credit reports are a record of a business’ activity, in large part consisting of payment history, trade lines, and credit accounts.

You may have a business credit file without knowing it. Or you may not yet have a business credit file, even if you’ve had an established business for some time.

A business credit report includes detailed information, such as:

  • Contact and identifying details for the business (name, location(s), owner, guarantor, business type)
  • Trade lines
  • Credit accounts
  • Payment history
  • Overall credit utilization
  • Public records (bankruptcies, liens, judgements, Uniform Commercial Code (UCC) filings, etc.)
  • Business credit scores and risk factors that estimate the probability of late payments and business failure

Not all business activity is reported on business credit reports. Only some lenders and suppliers will report trade lines to the business credit bureaus, where it will be added to reports.

Check out some credit card issuers and business-to-business merchants that report activity to the business credit bureaus. You can also request that vendors you work with begin reporting data to the bureaus, if they aren’t already.

If you haven’t yet established business credit, you’ll be asked to personally guarantee any credit cards or loans you take out for your business. This might not be preferable if you’re trying to separate all business and personal financial activity. But it’s usually unavoidable until your business has its own strong credit history.

You can check if your business already has a credit file with any of the major business credit bureaus. Or you can check on any other business.

Business credit is not covered under the Fair Credit Reporting Act (FCRA), and one of the consequences is that business credit reports are not private. Anyone can view any business credit report, although there’s often a charge for this information.

Business Credit Bureaus

There are three major business credit bureaus:

Each of these companies collects data and produces its own credit reports. They also provide their own credit scores based on those reports.

Small Business Financial Exchange (SBFE) is another name you’ll often hear associated with these companies. SBFE is not a business credit bureau, but it does pass along data from lenders to four different credit reporting agencies:

  • Equifax Business
  • Experian Business
  • Dun & Bradstreet
  • LexisNexis Risk Solutions (not a credit bureau, but collects and reports business credit activity)

So if a lender reports data to SBFE, you can usually expect that data to end up on the reports of these companies. You’ll find several credit card issuers that report business card activity to the SBFE below, like American Express and Capital One.

Take a moment now to look at some sample reports from the business credit bureaus.

Equifax Sample Credit Report Experian Sample Credit Report Dun & Bradstreet Sample Credit Report

What Are Business Credit Scores?

Business credit scores are based on information in business credit reports. Each of the business credit bureaus will typically provide credit scores along with the reports they provide, depending on the product you buy.

You may see three different types of credit score on a business credit report:

  • PAYDEX or Payment Index: On a scale of 1–100; Indicates how promptly a business has paid its recent bills. Late payments will lower this score.
  • Business Creditworthiness or Credit Score: Scale varies by credit bureau; A bit like a personal credit score, it provides an estimate of the likelihood that the business will be delinquent on payments in the next 12 months.
  • Business Failure or Financial Stability Score: Scale varies by credit bureau; Estimates how likely a business is to fail or experience severe financial distress in the next 12 months.

The simplest (i.e., least expensive) credit reports may only include one credit score, like a payment index. More complex (and expensive) reports will usually include more scores.

Each of the credit bureaus has its own scoring systems, using different algorithms and presentation styles. Dun & Bradstreet may give your business creditworthiness on a scale of 101 to 670, while Equifax may present the same kind of data in a range of 1 to 5 risk classes. But the scores you see will generally fall into the above three types.

These scores factor in a wide variety of data types to provide simple numbers that lenders and other companies can use to evaluate your business. Some of those data include:

  • Payment history
  • Credit utilization and outstanding balances
  • Trade lines, past and present
  • Credit accounts, past and present
  • Average age of accounts
  • Net worth
  • Business age
  • Business type and industry risk
  • Number of employees
  • Public records like collections, bankruptcies, liens, and UCC filings
  • Demographic data, including Standard Industrial Classification (SIC) codes
  • Trends over time

Check out this sample business credit report from Dun & Bradstreet, on which we’ve labeled all three score types. On business credit reports you can sometimes click to find more details about each score, including the main factors affecting them.

From a Dun & Bradstreet Sample Credit Report

From a Dun & Bradstreet Sample Credit Report

How to Build Business Credit

There are two basic stages on the path to business credit:

  1. Establishing credit files at the business credit bureaus
  2. Building business credit by including trade lines and credit accounts in those files

If you’ve had a business for some time, you might already have credit files at the bureaus. It’s easy to check to see if a report exists for your business (or any other business), although you’ll need to pay to see any details or credit scores.

Credit Bureau Check Business Credit Report Minimum Price per Report
Equifax Online search form $99.95
Experian Online search form $39.95
Dun & Bradstreet Online search form $61.99

Take note that the minimum prices mentioned above will provide the simplest credit reports available from each bureau. If you’re investigating a business they may not include the information you want. Check out the other options provided to see which one would be right for you. The more you’re willing to pay, the more information and analysis you’ll get.

There are also some free services that will provide business credit data, although their reports may be pretty sparse. They usually won’t show the same scores you’ll find on reports from the three credit bureaus. In some cases you may just get a free trial, although you can usually pay to get more detailed results.

Depending on what you’re looking for, you may be satisfied with one of these free services.

Credit Reporting Service Check Business Credit Report Online search form
CreditSafe Online search form
CreditSignal Online search form
Nav Online search form
Scorely Online search form

If you don’t yet have a credit file established, that’s OK — it’s a pretty simple process.

After completing all the following steps in Stage 1, it may take 30 to 60 days before your business credit reports are created or updated by the credit bureaus.

Stage 1: Establishing Business Credit Files

Each credit bureau has its own requirements for the creation of business credit files. If you have a business but aren’t seeing a credit report, you might be missing a few of these key ingredients.

Here are a few basic steps you should take that will apply to all the bureaus, and one for Dun & Bradstreet in particular.

Step 1: Incorporate

It’s important to create a separate legal entity apart from your own personal credit.

Incorporating lets you establish a separate credit file under your business name.

You can choose a C corp, S corp, or LLC, for example. With sole proprietorships your personal and business credit are tied together, so you’ll need to switch from that if you want to establish a separate business credit history.

Incorporating is good for your business in other ways beyond just creating a business credit report. It will separate your personal finances, protect you from liability in some cases, make it easier to get business loans, and can affect how much you pay in taxes.

Step 2: List Your Business Address and Phone Number

You should list your business name and address in directories to make it easier for the credit bureaus to find. Be sure to include your business phone number.

This means adding the information to the Yellow Pages, as well as 411 and other local and online directories.

Step 3: Obtain an Employer Identification Number (EIN) from the IRS

Having a Federal Employer Identification Number will give your business certain privileges, like the ability to open business bank accounts.

You can apply for an EIN online for free through the IRS website.

A valid Taxpayer Identification Number (TIN) is required to apply for an EIN. Valid TINs include Social Security numbers, Individual Taxpayer Identification Numbers (ITINs), and EINs themselves.

Step 4: Register with D&B and Get a D-U-N-S Number

You can register your business with Dun and Bradstreet for free, simply by submitting an application. This will establish a basic credit profile with D&B.

Click here to register your business with D&B and get a D-U-N-S number. It usually only takes one business day. You may find that you already have a D-U-N-S number, if D&B happened to create one for you.

D-U-N-S stands for “Data Universal Numbering System.” It’s a global identification system created by Dun & Bradstreet, and used to keep track of businesses of all kinds.

You don’t need to give out your D-U-N-S number to lenders or vendors. Your account information will be matched up by D&B using details like SSN or EIN, and then will be associated with your D-U-N-S number.

Step 5: Open a Business Bank Account

Open a business checking or savings account using your EIN. This will help keep your business and personal finances separate.

Step 6: Check Your Business Credit Reports for Accuracy

You may or may not have business credit reports yet.

If you do, you should check them to be sure there are no mistakes. If there are any errors, you should file a dispute or submit an update to remedy them. You can do this online.

Credit Bureau Update/Dispute Business Information
Equifax Online instructions
Experian Online instructions
Dun & Bradstreet
  • Log in
  • From the iUpdate menu, select “Submit Financial Statement”
  • Follow the instructions

Stage 2: Building Business Credit

Now that you’ve done everything required to establish a credit file, your business will need to do something worth reporting. That could mean working with a supplier or vendor, or using a business credit card.

Step 1: Open a Business Credit Card and Use It Responsibly

Open a business credit card using your business name, and using your EIN instead of SSN. You can get just one or several. Having more than one will add more accounts to your report, and makes it easier to keep your credit utilization low.

You’ll probably need to personally guarantee business credit card accounts, especially if your business is relatively new. Well-established businesses may be able to get cards without personal guarantees.

You may qualify for business credit cards without knowing it. The requirements are actually quite loose, and you may be approved if you’ve done any freelance work or even sold old belongings, for example.

Most business credit cards will report to at least one of the business credit bureaus, or to Small Business Financial Exchange. The way a particular card reports depends on the card issuer.

You can see how each issuer reports business card activity below.

In general, regular business card activity won’t show up on your personal credit reports. If the account becomes delinquent or enters a negative status, however, it will show up on personal reports. (This applies to most card issuers, but not in every case).

This means you can use business cards to prevent credit card debt from showing up on your personal credit reports, where it can increase your credit utilization and bring down your personal credit scores. Learn more about the differences between business and personal cards in our Q&A Videos:

When it comes to using credit cards responsibly, business cards are just like personal cards. There are a few key points to remember:

  • Understand the card terms: Take some time to read through your card’s details so you understand how the rewards, benefits, interest rates, and fees work.
  • Don’t charge more than you can pay off: Spend within your means. A credit card is not free money.
  • Always pay on time: Payment history is very important, and late payments will bring your credit scores down. Set up autopay to make sure you never miss a payment.
  • Keep your utilization low: Your overall credit utilization should be kept as low as possible if you want the highest scores you can get.
  • Don’t close accounts without a good reason: It’s generally better to leave credit cards open, unless you’re paying an annual fee for a card you don’t want, for example. This will help your credit utilization and average age of accounts.

Out of everything you can do with a credit card, paying on time is perhaps the most important. A history of late payments doesn’t mean you’ll be stuck with bad credit forever, but it’s one of the more difficult hurdles to overcome. It’s much easier to avoid them in the first place.

We recommend paying your statement balance in full each billing period, which will do three good things for you:

  1. Ensure that you pay on time
  2. Help keep your utilization low
  3. Prevent interest from accruing on your balance

To get yourself in the right mindset, imagine that you have a separate checking account that you’ll use to pay your credit card bill. Every time you make a credit card purchase, you could put the same amount of money in that second account. Then, at the end of the billing period, you’ll have enough in that second account to completely pay off your credit card statement balance. This wouldn’t be very practical to actually do, but it should help you think about setting money aside for your bill.

Paying your statement balance in full each month will have a strong positive effect on your credit scores, and it will save you money compared to a business that’s revolving a balance and accruing interest every month.

Step 2: Establish Trade Lines with Vendors, Suppliers, and Lenders

Some business-to-business merchants will report trade lines to the business credit bureaus. When you do business with these companies they’ll report the account and payment history, and that information will show up on your business credit reports.

Just like with credit cards, be sure to always pay your bills on time.

Ask the merchants you work with (or are planning to work with) whether or not they’ll report a line of credit to the business credit bureaus. If they don’t currently report, you can request that they start doing so.

We recommend looking for “net 30 day” vendors to work with. Net 30 refers to a payment system in which a business can make normal purchases on credit, with the full bill due in 30 days. (There are also net 15, net 60, and net 90 vendors, and these can be just as good for building credit, but net 30 are the most common).

Not all business suppliers, lenders, and net 30 vendors report trade lines and payment history to the credit bureaus. The bureaus don’t publish official lists of reporting vendors, because that would skew customer behavior and reporting accuracy.

However, there’s a lot of anecdotal online evidence of companies that report to the business credit bureaus. Here’s a collection of some of these companies, including net 30 vendors, gas companies, and lenders (other than credit card issuers, which are covered below).

Remember that these aren’t official lists, and you should check with the company before assuming it will report your account. In some cases you may need to meet certain requirements before a company will report, like a minimum purchase amount.

“Net Day” Companies

Gas Companies

Lenders and Financing Companies

Step 3: Monitor Your Credit Reports

After establishing a business credit file and adding some accounts to it, you’ll be on your way to excellent business credit. But you can’t just assume everything will work out fine from here on out.

You should periodically monitor your business credit reports for accuracy, just like you should monitor your personal credit reports. Errors can appear on your reports at any time, so it can literally pay to keep tabs on your reports (an incorrect entry could mean higher interest rates!).

Here’s the credit bureau information you’ll need to check your reports and correct any mistakes.

Credit Bureau Check Business Credit Report Update/Dispute Business Information
Equifax Online search form Online instructions
Experian Online search form Online instructions
Dun & Bradstreet Online search form
  • Log in
  • From the iUpdate menu, select “Submit Financial Statement”
  • Follow the instructions

Credit Card Issuer Business Reporting

Credit card issuers will report business credit card activity in the following ways.

In general, business cards in positive standing are reported to one or more business credit bureaus. Negative accounts will usually be reported to the personal consumer bureaus, and may be reported to the business credit bureaus as well. (Some issuers report a bit differently.)

A negative account is usually defined as an account that is delinquent, which means the minimum payment was not made by the due date. But different issuers may have different standards for judging an account to be delinquent. Some may wait until the account is 60 days past due, for example, while others may report it sooner.

Take note: The following data about where credit card issuers report business card activity is accurate to the best of our knowledge, based on information provided by the card issuers and our own research. Card issuers do not always publicly disclose which bureaus they report card activity to. Your experiences with business card reporting may differ from what we list below.

Not sure if you’ll qualify for a business card? You might! Learn more about who qualifies as a business owner and how to apply for business credit cards.
Issuer Positive Accounts Reported Negative Accounts Reported
American Express
  • Dun & Bradstreet
  • Small Business Financial Exchange
  • Dun & Bradstreet
  • Consumer credit bureaus
Bank of America
  • Small Business Financial Exchange
  • Consumer credit bureaus
Barclays None
  • Consumer credit bureaus
Capital One
  • Dun & Bradstreet
  • Experian Business
  • Small Business Financial Exchange
  • Consumer credit bureaus
  • Consumer credit bureaus
  • Dun & Bradstreet
  • Equifax Business
  • Experian Business
  • Small Business Financial Exchange
  • Consumer credit bureaus
  • Dun & Bradstreet
  • Dun & Bradstreet
  • Equifax Business
  • Experian Business
  • Dun & Bradstreet
  • Consumer credit bureaus
  • Consumer credit bureaus
USAA N/A (does not issue business cards) N/A
U.S. Bank*
  • Equifax Business
  • Dun & Bradstreet
  • Consumer credit bureaus
Wells Fargo
  • Small Business Financial Exchange
  • Consumer credit bureaus

*We’re not 100% sure about the data for U.S. Bank. Card issuers sometimes have trouble telling us where card activity is reported, as reps aren’t usually trained for questions like that. If you have any information on this you’d like to share, please contact us and let us know!

There are many business credit cards available today, and the right card for you will depend on your particular business needs.

Wrapping Up

Building strong business credit can take some time and dedication. But the general steps are pretty easy, as long as you understand what you’re doing.

  • Understand the basics of business credit
  • Establish and register your business
  • Get business credit cards and open trade lines with vendors
  • Pay your bills on time and don’t max out your credit cards
  • Monitor your business credit reports to see your progress and check for errors

That’s about it, although there are many details to take care of. Do you know of any effective ways to build business credit that we didn’t mention here? Feel free to share!

Learn more and find the perfect credit card for your business in The Best Business Credit Cards.
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