Building your business credit: 5 steps to success
Editor's Note
In general, good personal credit is all you need to qualify for a wide variety of business credit cards. Yet, working to build your business credit history and a good business credit score can offer more benefits.
A good business credit score can help provide better access to commercial loans and lines of credit, lower interest rates and even cheaper business insurance premiums. Since your business credit report can be accessed by third parties (for a fee), your potential clients, suppliers or investors may also use it when deciding whether to do business with you.
Having solid business credit may also help you separate your personal and business finances. With these details in mind, here are five steps you can take to build business credit.
Related: The best no-annual-fee business credit cards
Register your business
To establish business credit, you must first register your business, set up a business credit profile and start building credit; some sole proprietors can also establish credit.
If you have an established business with vendors and suppliers, you may have completed some of the steps below. Otherwise, here’s what you need to do before applying for business credit in your company name:
- Incorporate your business or form a limited liability company (LLC)
- Apply for a federal employer identification number (EIN), the nine-digit number the IRS uses to identify businesses for tax purposes
- Open a business bank account in your legal business name
- Ensure your business has consistent contact information, such as a phone number or email, linked to your business name
- Register with Dun & Bradstreet to get your free D-U-N-S number (Data Universal Numbering System). A nine-digit D-U-N-S number establishes your company's D&B credit file and serves as a business identifier
Related: Business cards vs. personal cards: Key differences
Apply for a business credit card
There are many good reasons to get a business credit card, including the desire to build your business credit profile. Business credit cards can also earn you rewards on everyday business expenses, and many of the top cards offer valuable welcome bonuses, too.
Whichever credit card you decide is best for your business, be sure to manage it responsibly. Avoiding late payments is essential. It’s also important to keep your credit utilization as low as possible. A high balance-to-credit-limit ratio could hurt you with some business credit scoring models.
Related: How to get a business credit card
Open tradelines with vendors
Another way to establish business credit is to apply for trade credit from vendors and suppliers. Here’s how to do it:
- Search for vendors and suppliers that offer net repayment terms, e.g., net 30, 60 or 90
- Confirm that the company reports activity to one or more of the major business credit bureaus (Dun & Bradstreet, Experian Business or Equifax Small Business)
- Apply for a tradeline
- Use your tradeline to purchase supplies, inventory or other materials on credit for your business
- Never pay late
Do note that you may need to establish several vendor tradelines to be eligible for a business credit score. To qualify for a Dun & Bradstreet Paydex score, for example, your business must have at least two supplier tradelines and three credit experiences on your credit report.
Related: Business line of credit vs. credit cards
Pay on time, preferably early
Payment history is the most important factor that influences your credit score — for both business and personal accounts. For personal credit scores, payment history accounts for 35% of your FICO score.
Paydex scores, on the other hand, measure a business’ past payment performance. On-time payments, therefore, are a must if you want to earn and maintain a good credit score.
However, with some business credit scores, you might receive an added boost when you pay your credit obligations early. The only way to earn a perfect Paydex score of 100, for example, is to have a history of early payments on your Dun & Bradstreet credit report.
Related: How to avoid and reduce credit card interest
Monitor your business credit report
Just as it’s important to monitor the health of your personal credit report and score, you also should keep an eye on your business credit information. Mistakes and fraud can happen despite the business credit bureaus' best efforts. And when errors appear on your business credit reports, they can harm your business credit scores.
Checking your business credit report won’t directly impact your score, but inquiries can be visible to lenders and may influence lending decisions. However, there might be a cost associated with reviewing your business credit information, depending on how you access it. Here are a couple of resources you can use to check your business credit online:
- Dun & Bradstreet: CreditSignal provides free access to four of your Dun & Bradstreet scores for 14 days, then alerts you when your business credit scores or reports change. (Paid business credit-monitoring options are available from $15 per month)
- Nav: Nav provides free business credit-monitoring services and access to your Equifax business report and Experian Intelliscore summary. (Paid business credit-monitoring options are available from $49.99 per month)
You can also contact the other business credit bureaus to purchase copies of your business credit reports and scores.
If you discover inaccurate data on your business credit reports, you should dispute those items with the appropriate business credit bureau as soon as possible.
Related: Do business credit cards affect personal credit?
Bottom line
Credit score bureaus don’t reveal the exact formulas that determine your business credit scores. However, we know that registering your business, applying for business credit cards and opening tradelines with vendors can help build your business credit. Once you’ve completed those steps, try to pay early (or at least on time) and periodically monitor your business credit report.
Related: 10 considerations for your small-business credit card strategy
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- Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 3X Membership Rewards® points per dollar spent on flights booked directly with airlines or on AmexTravel.com.
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Rewards Rate
| 4X | Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year. |
| 4X | Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year. |
| 3X | Earn 3X Membership Rewards® points per dollar spent on flights booked directly with airlines or on AmexTravel.com. |
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You may be eligible for as high as 100,000 Membership Rewards® Points after spending $6,000 in eligible purchases on your new Card in your first 6 months of Membership. Welcome offers vary and you may not be eligible for an offer.As High As 100,000 points. Find Out Your Offer.Annual Fee
$325Recommended Credit
Credit ranges are a variation of FICO® Score 8, one of many types of credit scores lenders may use when considering your credit card application.Excellent to Good
Why We Chose It
There’s a lot to love about the Amex Gold. It’s a fan favorite thanks to its fantastic bonus-earning rates at restaurants worldwide and at U.S. supermarkets. If you’re hitting the skies soon, you’ll also earn bonus Membership Rewards points on travel. Paired with up to $120 in Uber Cash annually (for U.S. Uber rides or Uber Eats orders, card must be added to Uber app and you can redeem with any Amex card), up to $120 in annual dining statement credits to be used with eligible partners, an up to $84 Dunkin’ credit each year at U.S. Dunkin Donuts and an up to $100 Resy credit annually, there’s no reason that foodies shouldn’t add the Amex Gold to their wallet. These benefits alone are worth more than $400, which offsets the $325 annual fee on the Amex Gold card. Enrollment is required for select benefits. (Partner offer)Pros
- 4 points per dollar spent on dining at restaurants worldwide and U.S. supermarkets (on the first $50,000 in purchases per calendar year; then 1 point per dollar spent thereafter and $25,000 in purchases per calendar year; then 1 point per dollar spent thereafter, respectively)
- 3 points per dollar spent on flights booked directly with the airline or with amextravel.com
- Packed with credits foodies will enjoy
- Solid welcome bonus
Cons
- Not as useful for those living outside the U.S.
- Some may have trouble using Uber and other dining credits
- You may be eligible for as high as 100,000 Membership Rewards® Points after you spend $6,000 in eligible purchases on your new Card in your first 6 months of Card Membership. Welcome offers vary and you may not be eligible for an offer. Apply to know if you’re approved and find out your exact welcome offer amount – all with no credit score impact. If you’re approved and choose to accept the Card, your score may be impacted.
- Earn 4X Membership Rewards® points per dollar spent on purchases at restaurants worldwide, on up to $50,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 4X Membership Rewards® points per dollar spent at US supermarkets, on up to $25,000 in purchases per calendar year, then 1X points for the rest of the year.
- Earn 3X Membership Rewards® points per dollar spent on flights booked directly with airlines or on AmexTravel.com.
- Earn 2X Membership Rewards® points per dollar spent on prepaid hotels and other eligible purchases booked on AmexTravel.com.
- Earn 1X Membership Rewards® point per dollar spent on all other eligible purchases.
- $120 Uber Cash on Gold: Add your Gold Card to your Uber account and get $10 in Uber Cash each month to use on orders and rides in the U.S. when you select an American Express Card for your transaction. That’s up to $120 Uber Cash annually. Plus, after using your Uber Cash, use your Card to earn 4X Membership Rewards® points for Uber Eats purchases made with restaurants or U.S. supermarkets. Point caps and terms apply.
- $84 Dunkin' Credit: With the $84 Dunkin' Credit, you can earn up to $7 in monthly statement credits after you enroll and pay with the American Express® Gold Card at U.S. Dunkin' locations. Enrollment is required to receive this benefit.
- $100 Resy Credit: Get up to $100 in statement credits each calendar year after you pay with the American Express® Gold Card to dine at U.S. Resy restaurants or make other eligible Resy purchases. That's up to $50 in statement credits semi-annually. Enrollment required.
- $120 Dining Credit: Satisfy your cravings, sweet or savory, with the $120 Dining Credit. Earn up to $10 in statement credits monthly when you pay with the American Express® Gold Card at Grubhub, The Cheesecake Factory, Goldbelly, Wine.com, and Five Guys. Enrollment required.
- Explore over 1,000 upscale hotels worldwide with The Hotel Collection and receive a $100 credit towards eligible charges* with every booking of two nights or more through AmexTravel.com. *Eligible charges vary by property.
- No Foreign Transaction Fees.
- Annual Fee is $325.
- Terms Apply.