Building Business Credit- A Quick How To Guide

The number one question we hear from potential and existing clients is: “How do I establish good business credit?”

The business credit reporting agencies like Dun & Bradstreet gather information and reporting from the vendors, suppliers, and creditors you do business with. Your business borrowing information gets processed through a credit reporting algorithm to establish your business credit score.

Establishing business credit separate from your personal credit score is a vital step for any business owner. The benefits of having good business credit will allow you to:

  • Secure optimal interest rates and credit repayment terms from banks and private lenders.
  • Obtain favorable payment terms with new suppliers and vendors.
  • Reduce the number of times you need to prepay for purchased services or products.

Follow our Quick How-To Guide to get on the road for an establishing and maintaining healthy business credit:

  1. Incorporate The Business: Sole Proprietorships and General Partnerships are legally the same as the business owner. This means that there is no separation between the business owner’s personal credit and business credit. Choosing to incorporate the business allows you to form an LLC that is separate from the business owner.
  2. Get A Federal Tax Identification Number, Otherwise Known As A FEIN: This acts as an identification number for the business. You will need this to open a business bank account in the name of the corporation or LLC.
  3. Open A Business Bank Account: Open a business bank checking account in the legal business name. Once the bank account is open use the account for all business financial transactions.Tip: Make sure to pay any business credit cards from your business checking account.
  4. Obtain A Business Phone Number: Have a separate phone number for your business that is not your personal cell phone. Open the business phone line account in the name of the business. List the business name and new business phone number on directories like the Yellow Pages so your business can be found online.
  5. Open A Business Credit Card: Opening at least one business credit card that is not linked to you or another owner will help establish business credit separate from your personal credit. Make sure the business credit card you select reports to the major credit agencies.
  6. Establish At Least Two Lines Of Credit With Suppliers and/ or Vendors: Ask your vendors and suppliers if they will help you create a credit for your company by reporting your positive payment history to credit agencies.
  7. Pay Your Bills On Time: Late payments will result in a negative credit report. Make sure your business bills are paid on time and early when possible.

Protect and Monitor: Just like your personal credit score, be sure to aggressively monitor and protect your business credit. Secure online files and create good internal controls that protect sensitive business information. Check your business credit report regularly for unusual activity that might indicate fraudulent identity theft activity.



The information and insights in this blog post are provided for educational purposes only and do not constitute financial advice from Merchant Funding Solutions Inc. Please consult your financial advisor before making any business financing decision. For information about Merchant Funding Solutions products and services, please visit the Merchant Funding Solutions FAQ page.

Leave a Reply

Your email address will not be published. Required fields are marked *