What business credit is and why it matters
Business credit is a financial record that belongs to your company, not to you personally. It tracks whether your business pays its bills on time, how much debt it has taken on, and how reliably it meets its obligations. Banks, suppliers, and other lenders use this record to decide whether to lend money to your business or extend payment terms.
The reason to build it is practical: once your business has its own credit history, you can borrow money or negotiate payment terms without putting your personal assets at risk. A supplier might let you buy inventory now and pay in 30 days. A bank might lend you money for equipment based on your business's track record, not your personal credit score. If your business fails, your personal credit and savings stay separate.
Business credit also makes your company look more established to customers and partners. A business with a credit history appears more stable than one that has just started.
Key Takeaways
- Business credit is a separate financial record from your personal credit, built by registering your business legally and opening accounts in the business's name.
- You need an Employer Identification Number (EIN) from the IRS before most lenders or suppliers will report business credit activity.
- The fastest way to build business credit is to open a business bank account, get a business credit card, and pay all bills on time.
- Business credit bureaus like Dun & Bradstreet, Equifax Business, and Experian Business track your record separately from personal credit bureaus.
- It typically takes three to six months of on-time payments before lenders will see enough history to offer better terms or larger credit lines.
Getting an EIN and registering your business
Before you can build business credit, the IRS needs to recognize your business as a separate entity. You do this by obtaining an Employer Identification Number (EIN), which is a nine-digit number that works like a Social Security number for your business. Even if you are a sole proprietor with no employees, you will need an EIN to open a business bank account and to report business income on your taxes.
You can explore for an EIN for free through the IRS website (irs.gov). The process takes about 15 minutes, and you receive your number when ready if you explore online. You can also explore by mail or phone, but online is fastest. You will need your Social Security number, the legal name of your business, and the address where your business operates.
At the same time, register your business with your state. If you are a sole proprietor operating under your own name, you may not need to register anything. If you are using a business name that is different from your personal name, you will need to file a "Doing Business As" (DBA) form with your county or state — the process varies by location. If you are forming an LLC or corporation, you file articles of organization or incorporation with your state's Secretary of State office. These registrations cost between $50 and $300 depending on your state and business structure.
Opening a business bank account
Once you have an EIN, open a business bank account in your business's name, not your personal name. This is the single most important step in separating your business finances from your personal finances, and it is also the first thing that starts building your business credit record.
Walk into a bank or credit union with your EIN, a government-issued ID, and proof that your business is registered (your DBA certificate, articles of incorporation, or a business license). Some banks also ask for a business plan or a description of what your business does. The bank will run a check against ChexSystems (a banking history database) to see if you or your business have had problems with previous accounts, but this is not the same as a personal credit check.
Once the account is open, use it exclusively for business transactions. Pay business expenses from this account and deposit all business income into it. This creates a clear paper trail that lenders can see when they review your business's financial history. Some banks report account activity to business credit bureaus; others do not. Ask the bank whether they report to Dun & Bradstreet, Equifax Business, or Experian Business — if they do, your on-time account management will help build your credit record.
Getting a business credit card
A business credit card is a credit card issued in your business's name. It works like a personal credit card — you charge purchases, receive a monthly bill, and pay it — but the activity reports to business credit bureaus instead of personal credit bureaus.
To get one, you will need your EIN, your business bank account number, and usually a personal may provide. A personal may provide means you are promising to pay the bill yourself if the business cannot, so the card issuer can still come after your personal assets if you default. Most business credit cards require a personal may provide, especially when your business is new.
Some card issuers will approve you based on your personal credit score if your business has no credit history yet. Others require a minimum business credit score or a certain amount of business revenue. Start by calling banks where you already have a personal account — they often have lower approval thresholds for existing customers. You can also look at cards from American Express, Chase, or Capital One, which all offer business cards to newer businesses.
Once you have the card, charge small, regular expenses to it — office supplies, software subscriptions, fuel — and pay the full balance every month. This creates a consistent payment history that business credit bureaus can see. Do not carry a balance or miss a payment; both will hurt your business credit score just as they would hurt your personal score.
Building credit with suppliers and vendors
Beyond a bank account and credit card, you can build business credit by buying from suppliers who report payment history to business credit bureaus. This is called trade credit.
Start with suppliers in your industry. Call and ask whether they offer net-30, net-60, or net-90 terms — this means you can buy now and pay in 30, 60, or 90 days. Many suppliers will extend these terms to new businesses if you fill out a credit process. On the process, list your business information, your EIN, and your business bank account details. Some suppliers also ask for a personal may provide.
Once you have an account, place small orders and pay on time, every time. The supplier reports your payment history to business credit bureaus. After three to six months of on-time payments, you will have enough history for lenders to see that your business pays its obligations. At that point, you can ask suppliers for higher credit limits or longer payment terms.
Common suppliers who report to business credit bureaus include office equipment companies, shipping and logistics providers, and industry-specific wholesalers. Ask each supplier directly whether they report to Dun & Bradstreet or other business credit bureaus — not all do, so you want to prioritize those that do.
Understanding business credit scores and reports
Business credit bureaus track your business's payment history and create a business credit score, similar to a personal credit score. The three main business credit bureaus are Dun & Bradstreet, Equifax Business, and Experian Business. Each one collects information from different sources — banks, suppliers, court records, and public filings — so your score may differ slightly across the three bureaus.
Business credit scores typically range from 0 to 100, though the exact range varies by bureau. A score above 70 is generally considered good; above 80 is very good. Your score is based on payment history (whether you pay on time), credit utilization (how much of your available credit you are using), length of credit history (how long you have had accounts open), and public records (whether there are liens or judgments against your business).
You can check your business credit report for free from each of the three bureaus once per year. Visit Dun & Bradstreet's website to request your Dun & Bradstreet report, Equifax.com for your Equifax Business report, and Experian.com for your Experian Business report. Review each report for errors — if a supplier reported a late payment that you actually made on time, you can dispute it and have it corrected.
How long it takes and what to avoid
Building business credit takes time. Most lenders want to see at least three to six months of payment history before they will offer you favorable terms or a larger credit line. Some will wait a full year before they consider your business creditworthy. This is why starting early matters — the sooner you open accounts and make on-time payments, the sooner you can borrow at better rates.
The mistakes that slow this process are the same ones that hurt personal credit: paying late, missing payments, maxing out credit cards, and taking on too much debt too quickly. Each late payment stays on your business credit report for seven years. A missed payment is worse — it signals to lenders that your business may not be able to meet its obligations.
Avoid personal credit inquiries for business purposes. If a lender pulls your personal credit score to make a decision about business credit, that inquiry does not help your business credit record. Similarly, do not mix personal and business finances. If you pay a business bill from your personal account, that payment does not build your business credit history.
Frequently Asked Questions
Do I need a business credit card to build business credit?
No, but it is one of the fastest ways. A business bank account and on-time payments to suppliers can build credit on their own. A credit card straightforward adds another account that reports to business credit bureaus, which speeds up the process.
Will building business credit hurt my personal credit?
Not if you keep them separate. Opening a business bank account does not affect your personal credit. A business credit card may trigger a hard inquiry on your personal credit when you explore, which can lower your personal score slightly, but the card itself reports only to business credit bureaus.
Can I build business credit if I am a sole proprietor?
Yes. You still need an EIN, a business bank account, and accounts with suppliers or a business credit card. The fact that you have not formed an LLC or corporation does not prevent you from building a separate business credit record.
What if I have bad personal credit — will that stop me from getting business credit?
It may slow you down, but not necessarily stop you. Most lenders will pull your personal credit when you explore for business credit, especially when your business is new. If your personal credit is poor, you may not may have access to for a business credit card or a business loan. However, you can still open a business bank account and build credit through supplier accounts, which do not always require a personal credit check.
How do I check my business credit score?
Visit Dun & Bradstreet, Equifax, and Experian's business websites and request your free annual report. You can also pay for a more detailed report that includes your credit score and recommendations. Some business credit monitoring services offer ongoing access to your score for a monthly fee.