Ready for a challenge? Of course you are— you’re a business owner after all. How about a challenge to establish and build business credit in less than two weeks? If you’re like many of the entrepreneurs we work with at Nav, building credit for your business is a task that’s been on your “to do” list for a while, but you’ve relegated it to the back burner more than once, and it’s simply not getting done.
We’re going to make it easy for you by giving you 11 tasks to accomplish in 11 days. (Or you can space them out and cover them in 22 days— just don’t let them get put on that back burner again!)
While you aren’t going to go from no business credit score to a stellar credit rating in less than two weeks, once you’ve checked these items off your list, you should be well on your way to building a positive business credit history.
Before we delve into the steps, let’s answer what is likely your most pressing questions:
How Fast Can a Business Build Credit?
Many business owners have made significant progress building their business credit using the steps described below. It’s impossible to predict exact results since many different factors go into building business credit, but it is not unusual to see positive results in just a few months.
Keep in mind it may take 30—60 days for new accounts to appear on business credit reports, so the sooner you start, the better!
Here are the eleven steps in our challenge:
1. Make Sure Your Business Is Legit
Making sure your business is set up properly is the most involved of the steps we’ll describe, but it’s important for a variety of reasons. To build business credit, you need a business. While that may sound obvious, the vast majority of small businesses in the US operate as sole proprietors and many haven’t taken even basic steps to make sure their business looks (and is) legitimate in the eyes of lenders, suppliers and business partners.
Make Your Business Official
If possible, establish a separate business entity (Limited Liability Company—LLC— or S Corp, for example). You can build business credit as a sole proprietor but when you operate your business that way you have no legal protection and some lenders recognize that. Plus, there may be significant tax advantages to setting up a legal entity.
Make sure you have a business name that doesn’t infringe on others, or will get mixed up with others— including in credit reports. Also be sure you’ve decided on your business address (even if it’s your home address) and get a business phone number separate from your personal phone number. (Here are some inexpensive business phone number options.)
File the Proper Paperwork
If your business needs a business license, get it. If you operate under a fictitious name (“doing business” as or “dba”), be sure to file a fictitious name registration with your state. These steps are important for ensuring your business is on the record with your state. Some business credit reporting agencies may access that information.
You may have taken some of these steps already, but if not, now’s the time to knock these out. Use this 15-step checklist to make sure you haven’t overlooked basic steps for making sure your business is legitimate.
2. Check Your Credit
Good credit helps individuals and businesses qualify for financing at lower interest rates, and often means higher credit limits as well. Lenders care about creditworthiness, and so should you.
Review Business Credit
Even if you haven’t done a thing to build business credit, your business may already be in the databases of commercial credit agencies. This is particularly true if you have formed a corporate structure or registered your business with your state; that information often makes its way to credit reporting agencies and starts your credit file.
You can check if you are in Experian’s database here; Dun & Bradstreet here (click on company search); and Equifax here. But a much simpler way to check is with Nav, where you can find out whether your business has a credit report with all three agencies at once.
Review Personal Credit
Some small business lenders and financing companies will also check your personal credit history. It’s essential that you know what they may see by checking your own credit reports. By law, you can get free personal credit reports once a year at AnnualCreditReport.com. But that won’t provide you with credit scores, though there are more than 138 places to get your credit scores for free.
Again, Nav is the only place to provide access to 6 detailed business and personal credit reports.
Check for Errors To Correct
When you check your credit reports—business or personal—make sure the information is accurate. Errors can affect your credit scores and make it more difficult to qualify for small business loans or other types of financing.
3. Get a DUNS Number
Dun & Bradstreet is one of the major business credit bureaus. A D-U-N-S number is an identifier for your business in the Dun & Bradstreet database.
Apply Through Dun & Bradstreet
If your business does not already have one (your business did not show up in step 2 when you checked D&B’s database), you can get a DUNS number for free. You do not have to register in advance with Experian or Equifax.
Essential for Building Business Credit
Although getting a D-U-N-S number may seem like a small step, it is one you won’t want to overlook. You may be asked for this number when you fill out credit applications. Including the correct information can help ensure you get credit for the accounts you establish.
4. Review or Pick Your NAICS or SIC Code
Industry codes may help your business qualify (or disqualify) for certain types of loans, including SBA loans and traditional financing.
Select the Right Industry Classification Code
A SIC or NAICS code is a code used to identify the type of business you operate. If your business already has a business credit file, make sure the SIC or NAICS code listed describes your business correctly.
Helps Lenders Assess Your Business
It is important that your industry code is accurate. Some types of businesses are considered higher risk and some lenders won’t lend to businesses in certain industry categories.
5. Get a Business Bank Account
Open an Account Under Your Business Name
This step won’t directly impact your business credit in the short term, as business bank accounts do not typically appear on credit reports. However, it can help you qualify for financing options, which in turn can help build your business’s credit.
A business bank account may help you qualify for business loans, lines of credit, or other types of financing in the future. It’s not uncommon for lenders to require small business owners to submit recent business bank account statements so they can verify business income and review the businesses’ cash flow. If you then secure financing, that account may appear on your business credit reports and help build credit.
Avoid Commingling Personal and Business Funds
When you get a business checking account, avoid using it for personal use. If you need to take money from your business, pay yourself either through formal payroll or owner’s draw then use those funds to pay personal expenses. (Talk to your accountant for the best approach.) Paying business expenses through personal accounts, or commingling business and personal finances can make tax time much more complicated.
6. Get a Business Credit Card
Choose a Business Credit Card
A business credit card will allow you to separate business and personal purchases, but more importantly, should give you a positive business credit reference if paid on time. This guide explains how major credit card issuers report to commercial credit agencies.
Fortunately, you may be able to get a business card even if your business is a startup. These applications are usually evaluated on the basis of the owner’s personal credit scores, not the credit score of the business. Most cards require good personal credit scores and sufficient income (from all sources, including personal income).
Use Responsibly and Pay on Time
Once you get approved, be sure to pay on time and charge only as much as you can afford to pay back on time. Missed payments or high debt can hurt your business credit scores. Pay at least the minimum payment each month, and try to pay more to keep debt levels down.
Automate Payments To Avoid Missed Payments
Pay your business credit card on time to help build good business credit. Paying bills on time is crucial to building good credit and it’s even more important with business credit since some business credit scores are based almost entirely on payment history. Don’t let a bill slip through the cracks and hurt your credit.
Set up automatic payments for your account, even if it’s just to make sure the minimum payment gets paid on time each month.
7. Get Your First Vendor Account
Vendors are companies that offer supplies your company needs, such as shipping boxes, cleaning supplies, printer ink, etc. Some vendors offer net-30 terms to business customers, which means the bill must be paid within 30 days of the invoice date. If you establish an account on terms with a vendor that reports that payment history to commercial credit bureaus, you’ll help build your business credit— provided you pay on time of course!
Check With a Supplier Your Business Uses Regularly
If you already purchase regularly from suppliers, ask whether they offer credit terms. This can be a good way to get started. Be sure to also ask if they report to business credit agencies on a regular basis.
Note: If your business is brand new and you don’t have a business credit history, some vendors may require you to purchase and pay for an order (or several orders) in full before they will extend payment terms.
Make On-Time Payments
We’ll say it several times: paying on time is essential for building business credit. Paying on time is the top thing you can do to build business credit.
8. Get A Second Vendor Account
Now that you have one account under your belt, you’ll want to establish a second one. Applying for numerous accounts in a short period of time can backfire on you if the lender is relying on personal credit. That’s because personal credit reports list an “inquiry” every time your personal credit is checked, and each one can lower your credit scores by a few points. But business credit inquiries are not as much of a concern; typically they don’t even matter.
Continue Building Payment History
You’re going to need a few accounts to establish business credit, so it often makes sense to get a second one. Again you can talk to suppliers you work with, or you can find vendors that report here.
9. Get A Third Account With Tradeline Reporting
You’ll need three accounts reporting to Dun & Bradstreet for a D&B Paydex score to be created. If your business credit card does not report to D&B, you’ll need a third account to complete the process.
Diversify Your Tradelines
Consider this option from Nav: detailed credit reports with tradeline reporting. Get 3 business credit reports and 2 personal credit reports with monthly tradeline reporting.
Customers who used Nav’s Detailed Credit Reports with tradeline reporting saw an increase in business credit scores up to 50% in the first 3 months.*
10. Schedule Payments on All Accounts
As we mentioned earlier (several times), the most important thing you can do to build strong business credit is to pay all of your business accounts that report on time. (Early can be even better.) But with so much to do in your business, it’s easy to get busy and miss due dates.
Automate Payments to Vendors
It may be harder to automate vendor accounts as compared to credit card accounts, but if the supplier doesn’t offer automated payments, you can often set up online payments from your business bank account.
Ensure Reliable Payment History
At a minimum, put a reminder on your calendar to make sure the payment is made on time. If you pay by mail, allow at least seven days to ensure it is received before the due date. Business credit reports will note if a payment is even a day or two late.
11. Monitor Your Business & Personal Credit
Congrats if you’ve made it through all 12 steps! You’ll now want to monitor your progress and continue to work on your business financial health. This is an ongoing process that will continue as your business grows.
Check Reports Regularly
It may be a couple of months before your new business credit card and vendor accounts show up on your business credit reports, so start monitoring your reports on a monthly basis to see when they appear. If they don’t show up in sixty days or so, contact those lenders and/or vendors to see if you can find out why they aren’t reporting.
Dispute Any Errors Quickly
Nav is the only place to get access to 6 detailed business and personal credit reports, along with tradeline reporting.
The majority of customers that use Nav tradeline reporting at least a year continue to see positive business credit score changes**
Frequently Asked Questions About Building Business Credit Fast
What Is the Quickest Way To Get Business Credit?
If you are looking for a quick way to build business credit as well as borrow in the name of your business, then supplier or vendor accounts are one of the fastest ways to get started. Business credit cards are also a fast way to establish business credit and get short-term financing for your business. (Most business credit cards require a personal guarantee but don’t appear on personal credit reports as long as you make the payments as agreed.)
Nav tradeline reporting is another way your business may establish credit quickly. Nav customers with positive business credit score changes averaged a 42 point increase*** across business credit bureaus within the first 3 months of using Nav tradeline reporting.
How To Build Credit With EIN Number?
Some vendors and suppliers, as well as some types of business financing, do not require a personal credit check. An employer identification number (EIN) may be used instead of a social security number. In that case, the small business owner may be able to obtain credit based solely on business qualifications and a business credit profile. However, lenders still need to try to ensure that they will be repaid. Typically that means they will want to see strong revenues and/or at least two years in business.
*Based on aggregate data tracking Experian® Intelliscore Plus business credit scores after three months of having Nav tradeline reporting. Results will vary. Scores are calculated from many variables; some users may not see improved scores.
**Based upon the aggregate percentage of Nav customers with positive score changes, nearly 75% of customers continue to see positive business credit score changes across business credit bureaus by keeping their Nav tradeline at least a year.
***Based on aggregate data tracking positive business credit score changes in the first three months of having Nav tradeline reporting. This increase is an average score increase. Individual business credit scores use different scoring models. Results will vary. Scores are calculated from many variables; some users may not see improved scores.
This article was originally written on January 17, 2018 and updated on August 18, 2023.