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4 Steps to Build Business Credit Quickly

Posted by Christine Aebischer to Business Advice, Business, Startup Tips

Business Credit  

This is a guest post by Fundera.

Just as building personal credit history is crucial for your own finances, building business credit is crucial for your business finances.


For every on-time payment, new credit account, and dollar of paid-down business debt, your business gains financial credibility. And your business credit history—recorded by business credit bureaus like Experian, Creditsafe, and Ansonia—will render a business credit score.


If you’ve checked your business credit score and you’re not quite satisfied with it, there are ways to quickly prove your business’s financial credibility—and see your business credit score improve as a result.


We’ve compiled a guide to the four best ways to quickly build and improve your business credit history, and subsequently, your score. Here’s the rundown:


How Does Business Credit Work?

Before we dive in, let’s establish how business credit works in the first place. A common business credit score, the Experian score, is on a scale from 0 to 100. Experian and other bureaus evaluate business credit based on their database of a variety of payment histories—like leases and banking information. The more responsibly you’ve paid your business’s bills, the closer to 100 your business credit score will be.


Experian only provides a business credit score to businesses on which they have a certain amount of financial information. They’ll need to have information on at least one trade line or credit account to generate a business report. To get a business credit score from Experian, start working with a vendor or a creditor who reports to the business credit bureau if you haven’t already.


With a solid business credit score, you can access more favorable rates from vendors, lenders, and creditors in the future—think lower interest rates on small business loans and more favorable terms on business insurance coverage.


Build Business Credit Quickly With These 4 Steps

Now that you’re familiar with how business credit works, let’s discuss short-term and achievable plans for improving your business credit score. Perhaps you’ve already seen your business credit score and you want to improve it. Or maybe you don’t have a business credit score yet, and you want to make sure your business credit history gets off on the right foot.


Whatever your motivation for working on your business credit, here are four straightforward ways to build business credit history quickly:


Open a Business Bank Account

Opening a business bank account will give your business a financial homebase. From your business bank account, you’ll be able to pay all of your bills (on time and in full, of course) under your business’s name. Be sure to open this business bank account under your business’s exact legal name and use your employer identification number (EIN). If you don’t have an EIN, take a couple of minutes to get one from the IRS beforehand. That way, your on-time bill payments will register as coming from your business and will be easier to track as a result.


Obtain a Business Credit Card

Still using your personal credit card to pay for business expenses? Not only are you creating a logistical nightmare by combining your personal and business expenses, but you’re missing out on an easy way to build business credit.


Using a business credit card—whether it’s secured or unsecured—and paying your bill in full and on time every month is how you build business credit without disrupting your typical workflow. If you’re going to buy those office supplies, or that plane ticket to visit a client, or that bulk inventory order anyway, you might as well do it with a tool that can improve your credit score.


Report Past On-Time Payments

Many businesses have an extensive archive of responsible payments that have already happened. These indicators of your business’s financial credibility aren’t lost to the world. If you have a stellar record of paying on-time for your business’s phone, internet, and utility bills, you can use a service like eCredable to report payments from up to two years back to certain credit bureaus.


Work With Companies That Report to Business Credit Bureaus

Moving forward, pay attention to whether or not vendors report your responsible payments to credit bureaus. Try to take your business wherever your credibility and reliability are made known to these financial institutions.


When you’re choosing vendors and suppliers, ask them whether or not they report to credit bureaus. When choosing a creditor—like a small business lender, a business credit card provider, or both—research whether or not they report payment activity to business credit bureaus. You might be surprised how many business vendors only report to personal credit bureaus. If you’re lucky, you can find vendors and creditors who report to both.


Building Business Credit Quickly: The Bottom Line

It will often take a bit of time and patience to build business credit. However, these four steps are levers you can pull to make information about your financial trustworthiness more accessible. Make sure business credit bureaus are in-the-know about your business’s stellar record, and you’ll have access to more affordable financing in the future.

About the author
“Christine

Christine Aebischer

is an editor at Fundera, a marketplace for small business financial solutions. Previously, she was an editor at the financial planning startup LearnVest and its parent company, Northwestern Mutual. Christine writes extensively on small business trends and personal finance, and has a degree in journalism and English from The College of New Jersey.


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