How Do I Build Business Credit for My Small Business?
Start by setting up the business as its own entity with an EIN, a business bank account and consistent details everywhere, then open accounts that report to the business credit bureaus and pay every one of them on time. Credit builds from reported payment history.
What's the foundation of business credit?
- Form the business as an LLC or corporation, or at least register your business name.
- Get an EIN from the IRS. It's free.
- Open a business bank account in the business's legal name.
- Use the same name, address and phone number on every filing, account and listing.
- Get a business phone line and listing.
Banks and bureaus match records by these details. Inconsistent information splits your history.
Which accounts report to business bureaus?
Business credit comes from accounts that report to the business bureaus. The easiest starting points:
- Net terms with suppliers that report payment history.
- A business credit card that reports to business bureaus.
- A small line of credit or loan with a bank that reports.
Ask each provider whether they report and to which bureau before you open the account.
Which payment habits build credit?
Pay on time, every time, and pay early where you can. Some business scoring models reward paying ahead of terms. Keep credit card balances low relative to limits.
How do you monitor business credit?
Check your business credit reports periodically. Mistakes happen, and a mixed up record with another business can drag your score down. Dispute errors with the bureau directly.
How long does it take to build?
There's no shortcut. Building a meaningful history takes months of reported payments. Beware of companies selling instant business credit or tradelines for a fee.
Where do advances fit?
Most merchant cash advances don't report to business bureaus. They can still help you grow the business while your credit builds, and a clean payoff history helps with future funders. But they aren't a credit building tool.
Why keep business and personal separate?
Personal guarantees tie your personal credit to many business accounts. Building strong business credit over time reduces how much funders and banks lean on your personal score.
Which business credit bureaus matter?
There are several business credit bureaus, and each keeps its own file on your company. A supplier reports to one and not the others in many cases, so your scores can differ from bureau to bureau. When you open a new account, ask where it reports. Spreading reported accounts across bureaus gives you a fuller picture everywhere.
How does a business get listed?
Some bureaus let you create or claim your business's file directly. Check that the name, address, industry and ownership details are right. A correct file makes every future payment count.
How can Afterfirst help with this?
Call 877-FUND-654 if you want to talk through which of our five services helps your business now while you build credit. A business line of credit that reports is often the best of both.
What else do owners ask about this?
- Does a merchant cash advance build business credit?
- Can I get a bank loan after taking a merchant cash advance?
- Will an MCA's UCC filing stop me from getting a bank loan?
More short answers on this topic are on the credit and liens FAQ, and the MCA apr calculator runs the numbers for your own file.
Where do these facts come from?
Have a question we didn't answer?
Ask us on the call. Call 877-FUND-654 with any question. We call you back, usually the same business day, and we always talk with you before we shop your file.