skip to Main Content

Pointers on Building Business Credit

As a small business owner, building business credit is important for the long-term success and financial stability of your enterprise. Good business credit can help you secure favorable financing terms, establish credibility with suppliers and vendors, and separate your personal and business finances. In this blog article, we’ll outline smart steps you can take to build and strengthen your business credit.

1. Establish Your Corporate Identity

To start building business credit, it is important to set your business up as a separate legal entity. Ensure you have legally registered your business with the appropriate government agencies, such as obtaining an Employer Identification Number (EIN) from the Internal Revenue Service (IRS). This helps to delineate your personal finances from your business finances which lays the foundation for building business credit.

2. Open a Business Bank Account

Opening a business bank account is crucial for separating personal and business finances. It allows you to track income, expenses, and cash flow in real time while providing a clear picture of your financial health to lenders and credit agencies. Regularly maintaining and managing a business bank account demonstrates to lenders that you are financial responsible and stable.

3. Obtain Necessary Licenses and Permits

Meeting all necessary legal requirements, such as obtaining the required business licenses and permits for your industry and location, signals to lenders and credit agencies that you are a legitimate business. It also helps to create the perception that your business is a responsible and compliant entity, which is critical for building trust.

4. Set Up Vendor Trade Lines

Collaborating with vendors who report your payment history to business credit bureaus is an effective way to build business credit. Work to establish relationships with suppliers and vendors who offer credit terms and ensure they report your payment history to credit agencies. Always pay your bills on time, as late payments will negatively impact your credit rating.

5. Apply for a Business Credit Card

Opening a business credit card in your company’s name can help you build credit assuming it’s managed responsibly. Look for a card that reports to business credit bureaus and offers favorable terms. Use the card consistently for only business expenses and avoid carrying a high balance. A good rule of thumb is to stay below 33% credit utilization rate.  Lastly, make sure you pay your statement balance in full and on time every month to demonstrate good credit management habits.

6. Obtain a Trade Credit from Suppliers

Once you have a consistent track record of on time payments with vendors, consider applying for trade credit. Trade credit involves purchasing goods or services and paying for them at a later agreed upon date. This not only helps you manage cash flow better but also highlights your ability to handle credit in a responsible fashion. Also, ensure that these suppliers report your payment history to credit bureaus.

7. Regularly Review Your Credit Report

Regularly review your business credit report to monitor your progress and to identify any errors or discrepancies that may pop up.  Check for any inaccuracies in your business information, payment history, balances, and credit utilization. If you find any discrepancies, dispute them and follow up with credit agencies to ensure the proper corrections are made.

8. Responsibly Grow Your Business

As your business continues on its growth path, ensure your financial decisions positively impact your overall creditworthiness. Work to maintain healthy financial liquidity ratios by avoiding excessive debt and managing your business’s cash flow effectively. Seek opportunities to diversify your lender sources, such as applying for business loans or lines of credit from reputable banks.

9. Develop Good Relationships with Lenders

Developing strong relationships with lenders and creditors can present opportunities for increased credit limits and favorable terms. Regularly communicate updates on your business’s performance and always provide them with the necessary financial information they may require in a timely manner. Cultivating trust and rapport with lenders can help improve your chances of accessing credit when it’s really needed.

10. Seek Professional Guidance

If you find building business credit challenging or overwhelming, consider seeking advice from professionals specializing in the field. They can provide expert guidance and help you navigate the numerous complexities of building business credit. Additionally, they can assist in long-term credit planning strategies as well as offering tools to monitor and manage your business credit more efficiently.


Building business credit takes time and effort, consistency, and responsible financial management. By following the steps outlined above, you can establish a strong foundation for your business credit and thus improve your chances of accessing credit on favorable terms. Remember to regularly monitor your credit progress and make decisions that are coincident with your long-term financial objectives. Ultimately, building and maintaining strong business credit can unlock new opportunities and contribute to the growth, stability, and success of your business.

Back To Top