Find out how building credit can help elevate your business and benefit your future.
Establishing business credit can show lenders, insurance companies, and other entities that your business is able to repay obligations.
While you may have access to personal credit, maintaining a separate business account and credit profile can contribute to building a healthier business and protecting personal assets from business liabilities.
You’ll find answers to frequently asked questions regarding establishing and improving business credit below.
Where do you start?
Experian, one of the three largest credit reporting agencies, recommends you take the following steps to begin building credit:
- Incorporate or form an LLC (Limited Liability Company) to ensure your company is seen as a separate business entity
- Obtain a federal Employer Identification Number (EIN)
- Open business accounts in your legal business name
- Set up a dedicated business phone line in your business name and make sure it’s listed
Registering with Dun & Bradstreet is also often encouraged. Obtaining a D-U-N-S Number is free and establishes your credit profile with D&B. Vendors and creditors are then able to pull a report with your company’s information and credit rating.
How do you begin building credit?
This option can provide flexibility and help separate personal and business transactions for accounting and tax purposes. As an added benefit, some business credit cards offer rewards or discounts.
Other forms of business credit include vendor, retail, and service credit, whereby business-to-business merchants report trade lines to the business credit bureaus. In this case, you’d receive goods and services in exchange for a promise to repay before a specified due date.
How do you raise a business credit score?
Once your business has established credit accounts that report to business credit bureaus, your business can focus on building positive credit history. Improving a business credit score is much like improving your personal credit score.
Here are some recommendations:
- Pay your bills on time, if not earlier
- Keep balances low
- Add trade references
- View your credit report periodically
- Dispute reporting or inquiry errors
How can you obtain a business credit report?
The three largest business credit bureaus are Dun & Bradstreet, Experian, and Equifax. Unlike personal credit reports, you must pay to view your full business credit file. Here’s how you can obtain a credit report from each of these credit bureaus.
- Dun & Bradstreet: Access D&B Business Credit Reports with the purchase of one of their monthly plans. The CreditBuilder™ Plus product costs $149 per month. You may also monitor changes to your D&B® scores and rating with their free CreditSignal® product.
- Equifax: Purchase a single Business Credit Report on Equifax’s website for $99.95 or order a multi-pack and get five reports for $399.95.
- Experian: There are multiple credit report versions for varying prices on Experian’s website. The Credit Score℠ Report is most affordable at $39.95.
Visit aplusfcu.org/balance to gain access to free resources covering a wide variety of topics like small business, credit, debt, and more