How to Establish Business Credit
Building business credit is a vital step toward ensuring your company’s long-term financial health and access to funding. Here’s a streamlined guide to help you understand the process and set your business on the path to success.
Step 1 – Build Your FundingPower Foundation™
Start by establishing a strong foundation for your business’s creditworthiness. Ensure you have all necessary licenses, a business bank account, and a clear separation between personal and business credit. Incorporating your business and creating a credible presence (including a professional website and contact details) will boost your chances of approval from lenders.
Step 2 – Incorporate Your Business
To establish business credit separate from your personal finances, incorporate your business. Whether you choose a C-corp or S-corp, incorporation will help you protect your personal assets while laying the groundwork for business credit.
Step 3 – Obtain Identification Numbers
Acquire your EIN (Employer Identification Number) from the IRS, and apply for a DUNS number through Dun & Bradstreet. These identifiers are essential for establishing credit accounts and will be used on loan applications, tax filings, and credit reports.
Step 4 – Register with Credit Bureaus
Ensure your business is registered with the major business credit bureaus—Dun & Bradstreet, Experian, and Equifax. Regularly check your business credit reports for accuracy and take immediate action to fix any discrepancies.
Step 5 – Ensure Consistent Business Details
All business information (name, address, and contact details) should be uniform across all platforms and documents. Inconsistent details can trigger fraud alerts and hinder your ability to secure credit. Always double-check your details before submitting applications.
Step 6 – Apply for Starter Credit
Start by applying for credit with vendors that report to the major credit bureaus. Even if your business has no credit history, certain vendors offer starter accounts without requiring a strong credit score. Ensure they report your payment history to build your credit profile.
Step 7 – Monitor Your Credit Regularly
Continuously track your business credit reports to catch errors and ensure your efforts are being accurately reflected. By maintaining positive payment histories and low credit utilization, you’ll steadily improve your credit profile and gain access to better financing options.
Benefits of Building Business Credit
Boost
FundingPower™
Qualify for more financing options with better terms.
Separate Business and Personal Credit
Protect your personal credit score and personal assets.
Better Cash Flow
Management
Flexible payment terms help manage cash flow.
Higher Business Valuation
Strong business credit adds to the value of your business.