How to Build Business Credit

What is business credit?
Check out our Business Credit Guide.

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Business Credit: What Every Small Business Owner Needs to Know

Many small businesses rely upon either personal or business credit to help finance the purchase of new machinery, acquire inventory and expand their operations. Even recurring costs like payroll can be covered by short-term loans. Most lenders require assurances that they’ll be repaid on time. One way they manage this risk is by reviewing the business’s credit scores and ratings on file with the major reporting agencies. These indicators can help banks determine whether or not to lend money, and at what interest rates.

In addition, many businesses are evaluated on their business credit when they bid on contracts or shop their services to potential business partners. Companies want to make sure they are working with other businesses that can deliver their product on time or complete a project without the risk of the vendor going out of business.

How can you build strong business credit scores and ratings? It all comes down to your ability to repay debts, but there’s more to the process than making on-time payments. Here are several best-practices that can help establish or improve your company’s business credit profile. Beware of fast-and-easy solutions the whole point of a business credit file is to provide visibility into your company’s financial health over time.

1. Establish Your Business as a Separate Entity

Ideally, business owners think about credit before they start a company. That’s because a business’s structure can affect how lenders or potential business partners judge its credit outlook. Corporations and Limited Liability Corporations (LLCs) exist as independent entities. Generally speaking, they have blank slates when it comes to establishing business credit scores and ratings. This separation of owner and enterprise is often the best route to follow when looking to establish your business credit.

On the other hand, a sole proprietorship permanently links your personal credit with the business’s credibility. As a result, lenders and potential business partners can rely on your personal credit score to judge the business. Both past and future oversights on your personal accounts can affect financing or contracting opportunities for the company.

2. Get an Employer Identification Number from the IRS

An Employer Identification Number (EIN) is required to file your company’s taxes. Banks and potential business partners can also request it when you fill out paperwork. You can apply for a free EIN on the IRS website.

3. Register for a Dun & Bradstreet D-U-N-S® Number

The D-U-N-S Number is a unique identifier for your business, and it’s available for free from Dun & Bradstreet. This will be the number some lenders and potential business partners use to check your business’s credit profile, so you want to have it available before applying for a loan.

4. Open a Bank Account for Your Business

In the interest of establishing your business’s independent identity, you’ll want to use a business bank account for company purposes. A business account can also help you build a track record with the bank. If and when you do apply for credit, you’ll come to them as an existing customer.

5. Make On-time Payments

Lenders want to know that they’ll get a return on their investment and potential business partners want to know that you’re reliable. Businesses should strive to make all payments on time (or early) in order to help avoid the appearance of financial stress on their business credit profile. Failure to pay creditors can lead them to submit negative reports to the business credit agencies. A history of delays or defaults can damage your ability to obtain credit or prove your credibility to another company.

6. Ask Vendors to Supply Trade References to Dun & Bradstreet

Most businesses purchase goods from vendors in order to provide their end product or service. Suppliers often extend trade credit to their business customers, requiring full payment by a specific date.

While many new business owners may think of traditional loans as a primary form of credit, this invoice system can actually be one of the most valuable means of business financing. You don’t have to pay upon delivery, and making on-time payments to suppliers can help establish a record of responsible financial behavior.

If your business is meeting its obligations to vendors, you should ask these companies to report your payment history to credit agencies in the form of a trade reference*. This record can be weighted in the calculation of many business credit scores and ratings, including Dun & Bradstreet’s PAYDEX® Score.

A new business may not have previous bank loans to refer to when applying for credit, but positive trade references can serve much the same purpose and can reflect a good payment history. A record of responsible financial behavior can work in your favor.

7. Monitor Your Business Credit Scores and Ratings

Building your business credit file isn’t a one-and-done operation. New information can negatively or positively affect your scores and ratings.

In order to help avoid unpleasant surprises, business owners should regularly check their company’s scores with a service like Dun & Bradstreet’s CreditBuilder™. Those who are looking for a free solution can subscribe to CreditSignal®** and receive alerts when their Dun & Bradstreet credit scores and ratings change.

Building your small business’s credit scores and ratings isn’t something that can be done overnight. Responsible business owners should work to establish and maintain reputable scores to help put their best foot forward when a lender or potential business partner pulls their business credit report.

Get Started Building Business Credit

Starting a Business

1

Choose a
Business
Structure

1
2

Get an EIN

2
3

Make Sure
You Have a
D&B D-U-N-S
Number

3
4

Separate
Business
and Personal
Credit

4

Established Business

5

Update Your
Business
Information

5
6

Pay on Time
(Or Early)

6
7

Ask for Trade
References

7
8

Monitor Your
Scores
& Ratings

8
9

Monitor
Inquiries

9
1

Choose a Business Structure

Establishing your business as a separate entity is the first step to separating your business and personal credit. Not sure why that’s important? This video should help.

Establish Your Business
2

Get an EIN

You’ll need an EIN to file your taxes and open a business bank account (step 3). Banks and potential business partners may also request it when you fill out paperwork. Having this number for your business is an important step in establishing your company.

Apply for a free EIN
3

Make sure you have a D&B
D-U-N-S® Number

Your company’s D-U-N-S Number identifies your business credit profile and helps other companies pull your business credit report.

Get a free D-U-N-S
Learn more about the D-U-N-S
4

Separate Business and Personal Credit

This video should help.

5

Update Your Business Information

Incomplete or inaccurate business information can impact your business credit scores and ratings. It’s easy to update your information with Company Update.

Go to Company Update
6

Pay on Time (Or Early)

When you don’t pay on time, vendors can submit negative trade references which can affect your business scores & ratings. Learn what else can affect your business credit profile.

7

Ask for Trade References

If you have vendors that you know you pay on time and that you have a good relationship with, ask them if they already submit trade references to D&B. If they don’t, see if they will. You can submit trade references yourself using CreditBuilder.

Get CreditBuilder™ Plus
8

Monitor Your Scores & Ratings

You’ll want to know if there have been changes to your business credit scores and ratings. New information like liens, judgements, bankruptcies, or negative trade references can affect your profile. Free services like CreditSignal® will send you alerts if there are any changes to your scores and ratings.

Get CreditSignal®
9

Monitor Inquiries

When a business pulls your business credit file to help determine if your company qualifies for a loan or can be trusted with a contract, it’s called an inquiry. The names of the companies pulling your report are confidential, but you can find out when an inquiry has been made and what industry the inquiring company is in.

I want to know what industries have made inquiries on my business.

I don’t want insight into industry, just inquiry alerts.

Get CreditBuilder™ Plus

How Well Do You Know the Dun & Bradstreet D-U-N-S® Number?

Put Your Knowledge to the Test

Take our interactive quiz on the D-U-N-S Number and find out just how much you know. Need to get a D-U-N-S Number for your business or federal contracts? Take the quiz to find out how you can get your free D-U-N-S Number, or search for your company to see if you already have a D-U-N-S.

Need to find another company’s D-U-N-S Number? Our quiz has all kinds of helpful links and articles that can get you started building your own business credit, or help you pull another company’s business credit file. Get started to your right!


How Well Do You Know the D-U-N-S Number®?
How Well Do You Know the Dun & Bradstreet D-U-N-S® Number?
The D-U-N-S Number is used to establish a business credit file, which is often referenced by lenders and others to help predict the reliability of a company. Let’s put your knowledge to the test!
The D-U-N-S Number has been around since 1963, and there are 280M+ businesses in Dun & Bradstreet’s database.
Did you know?
Even if not required, providing your D-U-N-S Number with your contract bid is a great way to showcase your credibility to non-government clients.
A D-U-N-S Number establishes a business credit file for a company, which can be leveraged for funding, contracts, and more. But, it can take up to 30 business days to receive
a D-U-N-S Number.

Companies may have a D-U-N-S Number and not even know it! See if your business already has a D-U-N-S Number by looking up your business or search for another company to find its report.
A company could have multiple D-U-N-S Numbers associated with it based on information its suppliers and partners have submitted to Dun & Bradstreet. You can verify your company information for free with Company Update.
The government currently requires a D-U-N-S Number for businesses that wish to bid on its contracts. You can get an expedited D-U-N-S Number if you’re a federal contractor.
You can actually use the D-U-N-S Number to do all of these things: establish your business credit file, manage your cash flow, and get better terms and rates on loans. You can use another company’s D-U-N-S Number to find its file and manage risks to your company.
Apple requires developers to have a D-U-N-S Number in order to verify the legal entity status of their organization. You can learn more about D-U-N-S Numbers for developers from Apple.
Your business needs an EIN (Employer Identification Number) for tax purposes, but it won’t establish your business credit file like a D-U-N-S Number will. Learn more about how the two numbers differ.
The D-U-N-S Number is a 9-digit identifier for a business, but the numbers are not representative of the business, they are provided at random!
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How’d you score? If we stumped you, learn more about the D-U-N-S Number, or apply for one below!
How’d you score? If we stumped you, learn more about the D-U-N-S Number, or apply for one below!