Do subscriptions build business credit?

Business owners often wonder how to build business credit without debt. One option is to get subscription payments that may help build business credit. 

Here's what you need to know about using subscription payments to strengthen your business credit profile. 

Does paying subscriptions build business credit?

Subscription payments can be a straightforward way to help build a business credit history, provided they are reported to major business credit bureaus. Accounts that report to business credit are called tradelines, and tradelines paid on time can help establish business credit.

Unlike a small business loan or line of credit that you may use from time to time, you probably pay subscription fees each month, and if they appear on your credit reports, they can help keep your credit history active.

How subscriptions impact business credit

A tradeline is an account listed on your credit report. Depending on how the company reports it, it may include details like the account type, credit limit, current balance, and payment history.

When you make regular payments, this positive payment history gets reported to the business credit reports. Since payment history is the most important factor on business credit, these accounts can contribute a credit reference with on-time payments.

Your monthly software subscriptions, phone bills, and utilities may not automatically appear on your business credit reports. You may need to seek out accounts that report. 

Types of subscriptions that may impact business credit

Subscriptions are sometimes referred to as "tier one" tradelines as they are among the easiest to get. If you are in the process of establishing credit, or trying to add additional tradelines to further build your credit history, they can be helpful. However, not all subscriptions are reported to business credit so you may need to actively seek out those that do.

Business services that may report:

• Business phone and internet service (some providers)
• Business utilities (gas, electric, water) added through reporting services
• Specialized credit-building subscription services like Nav Prime

Nav Prime offers up to two tradelines submitted monthly to the major business credit reporting agencies to help you build and maintain a strong business credit history.¹

What typically doesn't report:

Most business subscriptions don't report to credit bureaus automatically, including:

• Software subscriptions (Microsoft Office, Adobe, Slack)
• Streaming services for business use
• Standard utility payments without using a reporting service
• Equipment rentals paid monthly

You'll typically need more than just one active tradeline on your credit reports to really build a good credit score, and that means you'll need to seek out additional accounts. We describe other options below.

Building business credit 

Here are seven steps small business owners can use to start building business credit right way. The sooner you start, the sooner you may see results.

1. Lay the groundwork

Whether or not you want to build business credit, a professional reputation matters. It can also help as you establish business credit. Vendors or suppliers will want to verify your business is legitimate to avoid potentially fraudulent orders, and a new business will get scrutinized more carefully.

Get a business phone number and list it in directory assistance. Use a professional email address to your own domain name if possible, and choose your business address.

How this can help: These are little details but they can help. They may appear on your business credit reports and help establish your business as legitimate.

2. Register your business

Officially register your business with your state. If you form a business entity like an LLC or S corp you will do that as part of that process. If you're a sole proprietor, you can file a fictitious business name (DBA) with your state.

Get an Employer Identification Number (EIN), which is a taxpayer identification number for your business. You can get an EIN for free from the IRS.

How this can help: Registration information is often public record information; credit bureaus may use it to start your business credit profile.

3. Obtain a D-U-N-S number

A D-U-N-S^® Number from Dun & Bradstreet is required for a D&B business credit profile. If your business doesn't have one, you can request it for free. Other agencies like Experian and Equifax have their own identifiers they create when they open a file on your business, so you won't need to request them separately.

How this can help: If you apply for credit or net–30 accounts, providing your D-U-N-S^® Number can help make sure your account information is correctly associated with your business. 

4. Get tradelines

To build credit, you need accounts that report to business credit bureaus. One of the easiest ways to get started is with tradelines from subscriptions and net–30 vendors. There are a number of companies offering office supplies, branded apparel and other items a business needs on 30-day payment terms.

Beyond subscriptions and trade credit, many small business loans and business lines of credit report to business credit bureaus. Business credit builder accounts are another option. They allow you to borrow against a savings account and report monthly payments to credit bureaus.

How this can help: Without reported payment history, your business credit file will be weak or non-existent.

5. Open a business credit card

A business credit card that reports to commercial credit agencies can help build business credit, and unlike some small business loans, they are often available to both new and established businesses.

Most of the major small business credit card issuers require a personal credit check (not business credit) when you apply, making them startup friendly. They often report payment history to at least one of the major business credit bureaus.

How this can help: Regular, timely payments on a business credit card help build your credit profile.

6. Pay on time

On-time payments are critical for good credit scores. Business credit reports use "days beyond terms" (DBT) to indicate whether accounts are paid on time. For example, if you pay two days after the due date that account could be reported as 2DBT. 

How this helps: Paying accounts that report on time is one of the best ways to build strong business credit. Make every effort to pay on time.

7. Monitor your credit

Regularly check your business credit reports and scores to track your progress and identify any errors. Dispute any mistakes you find with the credit bureau reporting the wrong information. 

How this can help: Monitoring your credit will let you see what's being reported, check your progress, and address issues promptly.

6. Pay on time

On-time payments are critical for good business credit scores. Business credit reports use “Days Beyond Terms” (DBT) to indicate how late payments are. Paying on time or even early can significantly boost your scores.

How this helps: Paying accounts that report on time is the best way to build strong business credit. Make every effort to pay on time. 

7. Monitor your credit

Regularly check your business credit reports and scores to track your progress and identify any errors. Dispute any inaccuracies with the reporting credit bureau.

How this helps: Monitoring your credit will let you see what’s being reported, check your progress, and address issues promptly.