How to get and build business credit in 9 steps

New businesses need to establish business credit and grow over time. Some steps to building business credit, such as setting up an Employer Identification Number, are quick and easy. Patience may be required, such as demonstrating a responsible payment history over time.

Here's a step-by-step guide on how to gain and build business credibility.

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1. Register your business and get an EIN

If you are a new business owner, the first step to establishing business credit is to register your business.

2. Apply for business credit with Dun & Bradstreet

The three major business credit bureaus are Experian, Equifax, and Dun & Bradstreet.

However, you don't need to apply for business credit from Experian or Equifax. These companies independently create your company's credit file based on borrowing information from lenders that report to these financial institutions. We also obtain information from public records, such as court filings.

3. Check your personal credit score

It is possible to build strong business credit even if your personal credit score is low. But your personal history is often the key to getting a loan that will help your business's credit grow faster.

In the meantime, look for non-debt solutions to establish business credit, such as establishing trade lines (more on that below).

4. Open a business credit card

The sooner you open a business credit card, the sooner you can start building credit. This means you may have a longer credit history and a stronger score in the future.

5. Pay your creditors on time and early if possible

Payment history is the most important factor in determining a business's credit score. Paying off your debts on time and in full will help you build a stronger business credit profile in the long run.

Paying on time is good, but paying early is even better. Dun & Bradstreet assigns a higher Paydex score, which measures a company's payment history, to companies that pay early.

6. Establish business lines with suppliers

Suppliers often extend trade credits that can be paid within days or weeks of receiving inventory. This type of accounts payable relationship can improve a company's credit score as long as the supplier reports payments to the business credit bureaus.

You can set up business lines with smaller vendors, such as companies that sell water or office supplies. If these vendors don't report to the credit bureaus, you can list them as transaction references on your account. Dun & Bradstreet will follow up and collect transaction data.

7. Choose which lenders to report to the corporate credit bureaus

If you need a loan, ask your potential lender if they report your data to business credit bureaus. Weigh the response against other elements of the offer, such as the interest rate, to find the right terms.

8. Avoid Judgments and Liens

Judgments, liens, and bankruptcy filings in your business' name all negatively impact your business' credit score. Unpaid taxes or business debts may be subject to a lien, giving creditors the legal right to seize your property to pay off the debt. And unpaid debts can ultimately result in a court judgment, or judgment, against your business to collect the debt.

9. Keep your information up to date with all three business credit bureaus