5 Steps to Build Business Credit

5 Steps to Build Business Credit

by | Sep 1, 2023

Building a strong business credit score is crucial for any business owner. It not only separates your personal and business finances, but also provides access to better financing options and establishes credibility with suppliers and lenders. That’s why in this article, we walk you through five essential steps to help you build a solid business credit foundation.

What is a Business Credit Score?

A business credit score is a numerical representation of your business’s creditworthiness. Unlike personal credit scores, which focus on your individual financial history, business credit scores assess your business’s financial transactions and payment history. This distinction ensures a clear separation between your personal and business financial responsibilities.

Steps to Build Business Credit

Step 1: Lay the Groundwork with a Business Structure

Before you jump headfirst into the world of building business credit, take a moment to lay down a solid foundation with a legitimate business structure. Think along the lines of setting up shop as an LLC, a corporation, or even partnering up.

Step 2: Obtain Your Business Identity

Next, it’s time to get your business its own unique ID number, also known as the Employer Identification Number (EIN). This number is to your business what a Social Security number is to us. The EIN helps the IRS categorize the legal structure of a business and is important for maintaining proper tax compliance.

Step 3: Open Dedicated Accounts

You’ll want to open dedicated bank accounts just for your business – a checking account and a savings account. This separation of accounts isn’t just a fancy financial maneuver; it’s a strategic approach that can offer a multitude of benefits. It helps you gain a clearer understanding of your company’s financial health and simplifies record-keeping and accounting, making tax season a whole lot less daunting. Plus, having a separate savings account helps you to set aside funds for future investments, unexpected expenses, or expansion plans.

Step 4: Nurture Creditor Relationships and Payment History

Moving forward, it’s time to nurture creditor relationships with compelling payment history. Remember, these aren’t just faceless financial transactions – they’re opportunities to establish trust and reliability in the eyes of the credit world. Timely payments and responsible credit utilization can go a long way in increasing your business’s creditworthiness. Whether it’s servicing vendor invoices, settling credit card balances, or repaying loans, consistently meeting your financial obligations showcases your commitment to fiscal responsibility.

Step 5: Apply Strategically and Monitor Regularly

You’ve got the basics down, now it’s time to level up. As your credit foundation solidifies, think about applying for business credit cards, lines of credit, or even small loans. Start with manageable limits and interest rates – no need to go all-in just yet. While you’re at it, don’t forget to keep an eye on your business credit reports and scores.

MyScoreIQ offers business credit plans that allow you and your clients to receive credit reports and scores from Experian® and Dun & Bradstreet®, along with business credit monitoring.


1. Why is Building Business Credit Important?

Building business credit isn’t just a box to check; it’s a strategic move that can impact your business’s financial landscape in many ways. First and foremost, it’s like putting up a wall between your personal and business finances. This separation is a safeguard that shields your personal assets in case of any business-related financial hiccups.

But that’s not all – strong business credit opens doors to better financing options. Lenders see your solid credit history as a green light for extending credit at favorable terms, be it loans or lines of credit. Beyond the numbers, building business credit is like crafting your business’s reputation. Suppliers and lenders look at your creditworthiness to gauge how reliable and trustworthy your business is.

2. What is the Difference Between Business Credit and Personal Credit?

Business credit helps businesses borrow money for their operations, while personal credit allows people to borrow money for their own needs. Businesses show they can be trusted with suppliers and lenders using business credit, and individuals show they can be trusted with personal credit. Different companies keep track of these credits.

3. How Do I Obtain an Employer Identification Number (EIN)?

You can get your business a free EIN from the IRS website.

4. When Should I Start Applying for Business Credit Cards or Loans?

Start applying for business credit cards or loans when you’ve built a solid path of timely payments and a track record of responsible financial management. Begin with smaller credit limits or loans so you can test the waters before diving in. As your credit profile gets stronger, you can confidently seek out more substantial credit opportunities.

 5. How Can I Monitor My Business Credit Progress?

Regularly check in on your business credit reports with the help of MyScoreIQ business credit monitoring. This approach helps you spot inaccuracies, track improvements, and fix issues that may pop up.

6. Can I Build Business Credit Quickly?

Patience is the name of the game when it comes to building business credit. Just like Rome wasn’t built in a day, your business credit history won’t skyrocket overnight. Focus on steady progress – laying down the bricks of a solid credit history and consistently showcasing responsible financial behavior. This gradual approach ensures you’re building a credit foundation that can weather any financial storm.

7. How Long Does it Take to Build Good Business Credit?

Many experts agree it can take between one to three years. However, the time it takes varies. Keep in mind that building good business credit is an ongoing effort. Consistency in managing your finances, paying bills on time, and maintaining a positive credit history will contribute to your business’s creditworthiness over the long term.

Bottom Line

Building business credit is a crucial step for any business owner. By following these five steps, you can establish a solid credit foundation that will enable your business to access better financing options and thrive.

Remember to monitor your progress and make informed decisions to ensure your business’s financial success. For comprehensive business credit monitoring, explore MyScoreIQ business credit services.

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