Tips to Help You Build Credit

You’ve decided to open a business, and you even have the perfect name for it. Now what? From the very beginning, you’ll need to start building your business credit. Having good credit will help you get approved for a business loan and get better terms on that loan, which can save you a considerable sum of money in the long run. But, for now, you’ll need to know how to build your business credit. Taking advantage of tips for building credit can be a significant factor in your success. 


First, you’ll need to incorporate your business, which means you’ll choose a structure to classify it. There are several good reasons to do this. If you remain a sole proprietor, you are personally liable for your business’s fiscal responsibilities. Second, incorporating your business builds a credible image, protects your assets, copyrights your business name, and offers tax benefits.  

You can structure your business as an S corporation, a C corporation, or an LLC. LLCs are often best for small business owners because they offer the best protection and flexibility. 

Establish Your Business in the Real World 

For clients or customers and other entities to know your business exists and contact it, which is an integral step in building credit, you need to make it a public reality. So, first, get a business phone number and address. Then, if possible, set up a website where you can share your expertise, product or service offerings, and other fundamental information. It’s also a good idea to set up social media accounts. 

Get an Employer Identification Number (EIN) 

Next, obtain a free Employer Identification Number (EIN) from the IRS. You’ll need this nine-digit number to file tax returns, open a bank account, apply for any necessary licenses or permits, and establish a line of credit.  

Open a Business Bank Account and Credit Card 

Once you have an EIN, you can open a business bank account with a business credit card. Be sure to research the best credit cards for building credit to get the most out of yours. Some ways to be sure you’re getting the best deal with the best bank include researching bank reviews, comparing introductory rates, and noting customer service features. In addition, try to find offers that include account managers (who can assist you with account questions and concerns) or 24-hour hotlines or online chat features. 

Apply for a Business Line of Credit 

You’ll also need a business line of credit, which is different from opening a business credit card. A line of credit is a business loan that you can draw from for expenses and repay when you’re able to, depending on your lender requirements. It’s best to apply for credit with vendors who report to credit bureaus; Equifax, Dun & Bradstreet, and Experian are the three commercial credit bureaus.  

Vendor credit is also known as trade credit. Vendors typically offer net-30, net-60, and net-90 accounts. Each of these is defined by how many days you have to make a payment on your debt. A net-30 account could be best for building business credit quickly since you’ll be making payments more often and sending more data points to credit bureaus. It’s easiest to find and qualify for net-30 accounts. 

Keep Your Business Expenses Separate and Make Timely Payments 

Once you’ve opened a business bank account and been approved for a line of credit, be meticulous in managing your business expenses. First, keep all business expenses, bills, and documentation entirely separate from your personal ones. Second, balance your account frequently and keep all related information secure and well-organized.  

It’s imperative to pay your credit card bills and vendor account bills on time every time. Not doing so will adversely affect your business credit rating and profile.  

Monitor Your Credit  

After you’ve begun to make payments on your debts and establish good credit, it’s essential to monitor your business credit report. The report contains detailed information on your business and its credit history. This information mainly affects your ability to obtain credit and to do so on fiscally favorable terms in the future. Still, it also has a bearing on your business’s reputation and the cost of insurance premiums. 

Some credit bureaus offer services that will allow you to access a free business credit report, but you won’t be able to see all of the data in your file. So, particularly for a new small business, it may be best to pay the fee for more precise monitoring and peace of mind. 

Connect2Capital offers advice on how to build business credit fast and helps small business owners who may have difficulty procuring funding from mainstream lenders connect with mission-driven lenders that offer affordable financing. Complete this inquiry form to start the matching process between small business owners and lenders. 

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Disclaimer:  the information provided on this page is meant for general informational purposes only and may not reflect the most current resources and recommendations available. Please consult with your financial, tax, legal, and other relevant advisors when making decisions about your small business.