Many entrepreneurs find the process of building business credit frustrating. It’s not terribly difficult, but it does involve a few steps, the most important of which is to obtain accounts that report to commercial credit agencies. By paying those bills on time (or early) and keeping your debt in check, you can help build strong business credit. But because many small business bills aren’t reported to commercial credit reporting agencies, business owners may find themselves with little credit data on their reports.
But there are new solutions that can help business owners build credit using accounts they already pay, and it’s fast and easy. Here’s how they work.
Many entrepreneurs, startups, and small business owners find the process of building a company’s credit frustrating. It’s not terribly difficult to build business credit, but it does involve a few steps — the most important of which is to sign up for accounts that report to commercial credit agencies. By paying those bills on time (or early) and keeping your debt in check, you can help build strong business credit. But because many small business bills aren’t reported to commercial credit reporting agencies, business owners may find themselves with little credit data on their reports.
However, there are new solutions that can help owners build good business credit using accounts they already pay, and it’s fast and easy. Let’s explore how to build business credit and how these new solutions work.
What Is the Fastest Way to Build Business Credit?
Personal credit history and business credit history are two separate numbers. The fastest way to build business credit involves implementing several key strategies that can help establish a solid credit profile for your business in a relatively short period. It won’t happen overnight, but there are ways to make progress quicker.
Here are some effective methods to build business credit fast and help build a good business credit score:
- Get your details in place: Make sure to choose your details like a business name, business address, and business phone number. See the articles by our experts if you have questions on finalizing those details.
- Formalize your business: Then choose the type of business. Establish your business entity as separate from you as an individual, such as a limited liability company (LLC), partnership, or a corporation. Choosing the right business structure creates a clear separation between business and personal finances. This step is crucial for building a distinct credit profile and credit rating for your business. (Keep in mind that it is possible for sole proprietorships to establish business credit.)
- Get an employer identification number (EIN): Apply for an Employer Identification Number (EIN) from the IRS, which serves as the business equivalent of a Social Security number. This unique identifier is necessary for opening business bank accounts and applying for business credit.
- Get a DUNS number: A DUNS number is given out from the business credit bureau Dun & Bradstreet. You may need to request a free DUNS number for your business, but businesses are sometimes given this number automatically.
- Open a business bank account: Establish a dedicated business checking account and use it for all business transactions. Maintaining a separate bank account reinforces the financial separation between personal and business finances and contributes to building a credible financial history for your business.
- Get a business credit card: Business credit card accounts from card issuers may be available to any type of business — from a sole proprietorship to a corporation. A credit card can be a valuable tool for building business credit and expanding cash flow.
- Establish trade credit relationships: Borrowers can partner with net-30 vendors and suppliers who offer lines of credit — and report to one or more of the three major business credit reporting agencies. Timely payments to these vendors can help build your business credit profile and improve your business’s creditworthiness.
- Monitor and maintain good credit practices: Regularly monitor your business credit report to identify any errors or discrepancies and ensure that all information is accurate. Consistently maintaining good credit practices, like making on-time payments on business lines of credit and keeping credit utilization low, is essential for building a strong business credit profile.
By following these strategies, you can accelerate the process of building a robust business credit profile, which can enhance your business’s financial credibility and open up opportunities for accessing additional financing and favorable credit terms.
What Are the Foundations for Getting Business Credit Approvals?
The foundations for getting approved for business credit lie in establishing a strong financial foundation for your business. This includes:
- Maintaining a clear separation between personal and business finances.
- Creating a comprehensive business plan that outlines your company’s objectives and strategies.
- Demonstrating a consistent and positive cash flow.
- Establishing a solid business credit history and business credit scores through timely payments and responsible credit management.
- Building a strong relationship with net-30 vendors and suppliers.
- Ensuring compliance with legal and regulatory requirements.
- Regularly monitoring and reviewing your business credit reports are essential components for securing business credit approvals.
By focusing on these fundamental elements, you can enhance your business’s creditworthiness and increase the likelihood of receiving favorable credit approvals from lenders and creditors.
Understanding How Business Credit Building Services Work
Business credit building services are specialized accounts that help existing and new businesses establish and improve their credit profiles. These services typically work by providing small businesses with tradeline reporting.
Here’s an overview of how these services generally operate:
- Establishing trade relationships: The process begins when a business pays for the credit building service.
- Credit reporting: These companies typically report the details of the payments to the business to one or more commercial credit reporting agencies. These details include the payment amount, the business’s payment history, and the terms of the credit agreement, if applicable.
- Building credit history: The reported information is then used to build the business credit file and forms the basis for the business’s credit profile. Timely payments and responsible credit management contribute to a positive credit history, while late payments or defaults can have a negative impact on the business’s credit score.
- Credit score impact: The reported tradelines play a significant role in determining the business’s credit score and overall creditworthiness. A strong history of timely payments and responsible credit utilization can result in a higher credit score, making it easier for the business to access financing, secure favorable credit terms, and establish credibility with lenders and suppliers.
Business tradeline reporting is crucial for building and maintaining a strong credit profile, which is essential for accessing various financial opportunities and ensuring the long-term financial health and stability of the business.
Services That Help Your Business Build Credit
You don’t have to go it alone to build business credit fast or to find the right business credit builder account for you. Instead, turn to one of these services that can help build your business credit faster and easier.
1. Nav Prime
Nav offers two business tradeline reports for all Nav Prime customers — one through the monthly Nav Prime payment and the other through regular usage of the Nav Prime Card (which is included in the subscription) for business expenses.
These tradelines can help you build business credit faster and can provide enough tradelines to qualify for small business funding on its own. You’ll also get access to full business credit reports and scores from major commercial credit reporting agencies to track your progress.
How it works
The first step is to sign up for Nav Prime. Your Nav Prime payments reported as a new tradeline to the major business credit agencies. You’ll also get a second tradeline when you regularly use and make timely payments on your Nav Prime Card. All of this activity is reported to the major business credit bureaus, which helps build your business credit history. You won’t have to worry about interest rates because you’ll make daily repayments on your Nav Prime Card.
Along with your Nav Prime Card, you’ll also get a Nav Business Checking account as part of Nav Prime. It’s usually essential to have a business checking account to qualify for small business loans, so Nav Prime sets you up on the path to better business funding.
Your personal credit score won’t be impacted when you apply to Nav Prime.
Is it safe?
Yes. Nav has helped over 2.1 million small businesses make real moves toward better financial health and funding. But don’t take our word for it. According to Inc., “Nav gives business owners the fastest, easiest, and most trusted path to financing.”
How much does it cost?
Nav Prime costs $49.99 per month for the entire bundle. This includes tradeline reporting, Detailed Credit Reports, the Nav Prime Card, a Nav Business Checking account, and more.
2. eCredable Lift Small Business
You set up an account with eCredable Business Lift, which offers a service designed to help business owners build credit using bills they already pay. You can link specific types of bills (see below) to eCredable, which then reports that information to multiple major commercial credit reporting agencies. Those accounts, when reported and paid on time, can help build business credit. In addition, eCredable Lift Business Lift also reports the monthly fee to the major business credit bureaus as a tradeline.
The types of accounts that may be reported include:
- Mobile or landline phone
- Cable or satellite TV
How it works
While some vendors take 30 – 60 days to report new accounts to business credit agencies, the process with eCredable is fast. “We usually get the data in a few minutes once the account is linked,” says Steve Ely, CEO of eCredable. “We put it in our file and report weekly to the bureaus.”
Even better, up to 24 months of payment history may be included, which can be a tremendous boost for a business that has established accounts. Let’s say you’ve had a business cell phone account for a couple of years, for example. If you link that account to your eCredable Small Business account, that past payment history (up to 24 months of the most recent payment activity available from the provider’s website) can appear on certain commercial credit reports within a week or less.
Business credit reports (check yours for free at Nav) don’t list the names of creditors, and these accounts are no different. Individual accounts will be reported under the category of “business services.” In other words the name of the utility provider, cell phone company etc. will not appear on the report, it will be included in that category.
Is it safe?
Although business credit reporting is fairly new for eCredable, the company itself has been around since 2009 as a consumer reporting agency. Its mission has been “to help almost 60 million adults who would like to access affordable financial services, but are hindered by their lack of a positive credit history.” As a credit reporting agency, it is required to abide by the federal Fair Credit Reporting Act and maintain standards to help ensure maximum possible accuracy.
Recently it expanded its services to help entrepreneurs build small business credit. “Historically we focused on helping consumers build a credit history from their phone, internet, and utility payment histories,” explains Ely. “Many of these consumers told us they were small business owners and could we help them build better business credit scores too. The technology and user process is very similar, so we spent the last year enhancing our system to meet this critical need.”
How much does it cost?
At the time of writing, it costs $19.95 per month for Business Lift or $29.95 per month for Business Lift+. You can link as many qualifying accounts as you want, as long as they fall into the service categories above and offer online access to the account information.
Are Tradeline Services Legitimate and Safe?
Yes. Using a business tradeline to build your business credit history is not only legitimate — it’s usually necessary. Business owners have two options in terms of this type of credit account: To use a net-30 vendor that sells office supplies or other objects that you may not even need, or to use a service like Nav Prime that offers tradelines built into products and services you already use and love.
On the other hand, there is an entire market of what is called “tradelines for sale” that falls into a legal and ethical gray area. These are also legal, but it’s worth understanding more if you’re considering going that route. Read this tradelines for sale breakdown from Nav’s experts.
Pricing and Costs of Credit Building Services
Most credit building services charge a monthly fee. The cost of the fee depends on how much is included with the service. If there are multiple tradeline options, you may have to pay a little more, but you’ll receive double the tradelines in return. Some business financing only requires two tradelines to qualify, so you’ll be well on your way toward securing business funding if you use these services.
In the end, it’s all about what makes the most sense for your business in the short-term and long-term. If the price of a tradeline service can provide you with a valuable tool you couldn’t find elsewhere, it may be worth the price.
This article was originally written on September 14, 2018 and updated on November 29, 2023.