Building your business credit: 5 steps to success
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 has the ability to offer more benefits.
A good business credit score can provide better access to commercial loans and lines of credit, lower interest rates and even cheaper business insurance premiums. Since your business credit report is public (available 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.
Register your business
The first thing to do to establish business credit is register your business and set up a business credit profile.
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 an LLC (limited liability company).
- Apply for a federal employer identification number, the nine-digit number the IRS uses to identify businesses for tax purposes.
- Open a business bank account in your legal business name.
- Set up a dedicated phone line in your business name and ensure it’s listed.
- 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.
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.
Pay on time, preferably early
Payment history is the most important factor that influences your credit score — both business and personal. For personal credit scores, payment history accounts for 35% of your FICO score. Paydex scores, on the other hand, measure a business’s 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: TPG reader question: Does it hurt to pay off your card balance before the billing cycle ends?
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 affect your business credit score. 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/$189 per year.)
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.
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.
Top offers from our partners
How we chose these cards
TPG featured card
Rewards
| 5X | Get 5X Membership Rewards® points on flights and prepaid hotels on amextravel.com |
| 1.5X | Earn 1.5X points on eligible purchases at US construction material & hardware suppliers, electronic goods retailers and software & cloud system providers, and shipping providers, as well as on purchases of $5,000 or more everywhere else, on up to $2 million of these purchases per calendar year |
| 1X | 1X points for each dollar you spend on eligible purchases. |
Intro offer
Annual Fee
Recommended Credit
Why We Chose It
It's hard to find a card that competes with the mile-long list of benefits that come with the Amex Business Platinum. While it's certainly not the card for the average consumer, a business owner with tons of expenses -- especially related to travel -- will find this card incredibly valuable. This card is similar to the consumer version that Amex offers, but with more business-oriented perks around statement credits and earning rates that are a better fit for business owners.Pros
- An up to $100 credit for Global Entry or TSA PreCheck application fee every four to five years
- Up to $400 annual credit for eligible U.S. Dell purchases (enrollment required)
- Gold status at Marriott and Hilton hotels (enrollment required)
- Access to the Fine Hotels & Resorts program and Hotel Collection
- International Airline Program and Cruise Privileges Program
Cons
- Steep annual fee
- Difficulty meeting $15,000 welcome offer for smaller businesses
- Limited high-bonus categories outside of travel
- Welcome Offer: Earn 120,000 Membership Rewards® points after you spend $15,000 on eligible purchases with your Card within the first 3 months of Card Membership.
- Get 5X Membership Rewards® points on flights and prepaid hotels on amextravel.com, and 1X points for each dollar you spend on eligible purchases.
- Earn 1.5X points (that’s an extra half point per dollar) on eligible purchases at US construction material & hardware suppliers, electronic goods retailers and software & cloud system providers, and shipping providers, as well as on purchases of $5,000 or more everywhere else, on up to $2 million of these purchases per calendar year.
- Unlock over $1,000 in value per year for statement credits on select purchases, including tech, recruiting and wireless with the Business Platinum Card.
- $200 Airline Fee Credit: Select one qualifying airline and then receive up to $200 in statement credits per calendar year when incidental fees are charged by the airline to your Card or any of the Additional Cards on your Platinum Card account.
- $189 CLEAR® Credit: CLEAR® uses biometrics to assign you a touchless ID, allowing you to move faster through security at select airports and stadiums across the U.S. You can cover the cost of a CLEAR membership with up to $189 in statement credits per calendar year after you pay for CLEAR with your Business Platinum Card®.
- The American Express Global Lounge Collection® can provide an escape at the airport. With more than 1,400 airport lounges across 140 countries and counting, you have more lounge location options than any other credit card on the market as of 9/2021.
- $695 Annual Fee.
- Terms Apply.
Rewards Rate
| 5X | Get 5X Membership Rewards® points on flights and prepaid hotels on amextravel.com |
| 1.5X | Earn 1.5X points on eligible purchases at US construction material & hardware suppliers, electronic goods retailers and software & cloud system providers, and shipping providers, as well as on purchases of $5,000 or more everywhere else, on up to $2 million of these purchases per calendar year |
| 1X | 1X points for each dollar you spend on eligible purchases. |
Intro Offer
Welcome Offer: Earn 120,000 Membership Rewards® points after you spend $15,000 on eligible purchases with your Card within the first 3 months of Card Membership.120,000 pointsAnnual Fee
$695Recommended 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.670-850Good, Excellent
Why We Chose It
It's hard to find a card that competes with the mile-long list of benefits that come with the Amex Business Platinum. While it's certainly not the card for the average consumer, a business owner with tons of expenses -- especially related to travel -- will find this card incredibly valuable. This card is similar to the consumer version that Amex offers, but with more business-oriented perks around statement credits and earning rates that are a better fit for business owners.Pros
- An up to $100 credit for Global Entry or TSA PreCheck application fee every four to five years
- Up to $400 annual credit for eligible U.S. Dell purchases (enrollment required)
- Gold status at Marriott and Hilton hotels (enrollment required)
- Access to the Fine Hotels & Resorts program and Hotel Collection
- International Airline Program and Cruise Privileges Program
Cons
- Steep annual fee
- Difficulty meeting $15,000 welcome offer for smaller businesses
- Limited high-bonus categories outside of travel
- Welcome Offer: Earn 120,000 Membership Rewards® points after you spend $15,000 on eligible purchases with your Card within the first 3 months of Card Membership.
- Get 5X Membership Rewards® points on flights and prepaid hotels on amextravel.com, and 1X points for each dollar you spend on eligible purchases.
- Earn 1.5X points (that’s an extra half point per dollar) on eligible purchases at US construction material & hardware suppliers, electronic goods retailers and software & cloud system providers, and shipping providers, as well as on purchases of $5,000 or more everywhere else, on up to $2 million of these purchases per calendar year.
- Unlock over $1,000 in value per year for statement credits on select purchases, including tech, recruiting and wireless with the Business Platinum Card.
- $200 Airline Fee Credit: Select one qualifying airline and then receive up to $200 in statement credits per calendar year when incidental fees are charged by the airline to your Card or any of the Additional Cards on your Platinum Card account.
- $189 CLEAR® Credit: CLEAR® uses biometrics to assign you a touchless ID, allowing you to move faster through security at select airports and stadiums across the U.S. You can cover the cost of a CLEAR membership with up to $189 in statement credits per calendar year after you pay for CLEAR with your Business Platinum Card®.
- The American Express Global Lounge Collection® can provide an escape at the airport. With more than 1,400 airport lounges across 140 countries and counting, you have more lounge location options than any other credit card on the market as of 9/2021.
- $695 Annual Fee.
- Terms Apply.