How To Build Business Credit Without Using Personal Credit | CreditShout

How To Build Business Credit Without Using Personal Credit

How To Build Business Credit Without Using Personal Credit


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For those of you that are small business owners, you likely already know how important your credit is. Many entrepreneurs that start a business are usually depending on their personal credit because they’ve never had business credit before.

As a business owner, you already have a lot on your plate in the day-to-day operations, never mind all the other things you’re doing to grow your business.

While your personal credit can help you in a lot of different scenarios, business credit has a lot of great rewards and benefits. Plus, it’s super important to build credit for your business name. If you’ve never thought about starting your business credit, today is a great time to learn.

How To Build Business Credit Without Using Personal Credit

Yes, business credit can be tough to get but it’s worth the effort. Even if you don’t plan on using business credit at this point, you should still try to get it.

For example, if you have good business credit, it can help lower your insurance premiums while also lowering interest rates.

It never hurts to establish your business credit now for the future.

Business Credit Versus Personal Credit

If you don’t have business credit, you’ve likely been using your own personal credit when credit is needed. With business credit, you’ll finally have the opportunity to keep your personal and business credit apart.

If this is going to be the first time you’re applying for business credit, you may need a personal guarantee agreement. This guarantee means you’re liable for the debt you account for if your business can’t pay it.

The good news, once you build your business credit, you’ll be able to apply for credit and loans without this agreement.

How Can I Build Business Credit?

How To Build Business Credit Without Using Personal Credit

First things first, you need to check to see if your business has credit. Just like with personal credit reports, you can get a business credit report too. 

There’s 3 major business credit bureaus, these are Dun & Bradstreet, Equifax and Experian. For a small fee, all 3 of them will give you a business credit report (if you have one).

When it comes specifically to business credit, lenders may check your personal credit, business credit or both.

(1) Start Your Business Credit

If you don’t have any business credit, you’re going to need to get started building it.

Now, some business scoring models can generate a business credit score with your business information and personal credit history. However, others may solely focus on information related to your business.

To establish your business credit, you’ll need to do the following;

  • You’ll need to incorporate your business or form a LLC (Limited Liability Company). This will split your personal and business identities to ensure the two are separate.
  • Get your federal employer identification number (EIN). This is a free service offered by the IRS. This will identify you as a business entity.
  • Open a business bank account. Make sure you use your legal business name.
  • Get a phone line that’s dedicated to your business. You do want to make sure you use your business name when listing the number.
  • Make sure to register with Dun & Bradstreet. By doing so, you get a D-U-N-S Number. This is a 9 digit number that’s used to identify each physical location of your business. It’s free for all businesses required to register with the federal government for contracts or grants.

Business credit bureaus can use your EIN or D-U-N-S Number to identify your business’s activities and payments when reported, and business credit scoring systems can use the data to generate scores and reports.

Business credit scores can also take into account public records, such as legal filings, liens and your business’s size and industry. But a history of on-time or early payments can go a long way in helping to create a strong financial track record.

(2) Get A Business Credit Card

One of the easiest ways to begin building your business credit profile is by getting a new business credit card. If you’ve never opened a business credit card account, you can fall back on your personal credit. 

If you have great personal credit, you should be able to get a business credit card.

Business credit cards often have good rewards and benefits too. If you can get a good cash back business credit card, you can earn thousands in savings, if not tens of thousands.

(3) Work With Vendors That Report

If you can find vendors that report your payments to the major business credit bureaus, this is another way to quickly begin building your business credit.

If you’re already working with vendors, ask them if they report your payments. If they don’t, you may want to consider finding vendors that do. Just make sure you verify if they report first before you open an account with them.

(4) Be Sure To Pay Vendors Early And Often

Remember, your payments are reported if you’re using a vendor that reports them. The more payments you make, the more it’s reported.

The Dun & Bradstreet PAYDEX score ranges from 1 to 100, 100 being the top score you can get. This score is based on your payment history with vendors. If you’re paying vendors on time, ensuring you pay early, you can build this score up.

(5) Always Monitor Your Business Credit Accounts

Even if you’re just getting started building your business credit, you want to monitor your account closely.

If you have years of business credit, there could be errors on your report you don’t know about. You just want to make sure everything is being reported accurate.

In Closing

Yes, it takes time to build your business credit but it’s worth every second you attend to your accounts. If you’re trying to grow a business, you’ll need credit from time to time, some of you will need credit regularly.

It’s never too late to get started. Just follow these tips and you’ll be on your way to building the business credit you need.

The editorial content on this page is not provided by any of the companies mentioned and has not been reviewed, approved or otherwise endorsed by any of these entities. Opinions expressed here are the author's alone. Additionally, the opinions of the commenters are not necessarily the opinions of this site

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