What is business credit & how does it work?
Gerri Detweiler
Education Consultant, Nav
Summary
- The term “business credit” is used to describe business credit ratings, or sometimes as a term for business loans and financing.
- Strong business credit may help your business secure better loan rates or terms, longer vendor payment terms, lower insurance premiums, and new business partnerships.
- Business credit is tracked separately from personal credit by commercial credit bureaus like Dun & Bradstreet (D&B), Experian, and Equifax.
- Learn how business credit works, as well as how to check, manage, and monitor your business credit.
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Maybe you’ve heard of business credit as a small business owner but aren’t sure why it matters. Or maybe you understand you need it but don’t know how it works. Learn what you need to know about business credit as a small business owner.
Business credit definition
Business credit tracks your company's track record of payments to lenders, suppliers, and other commercial partners that report to business credit bureaus. Anyone who is thinking about doing business with your company can purchase your business credit reports.
A strong business credit history may:
- Save your business money in lower interest rates or insurance premiums,
- Help your business get longer payment terms with suppliers, and
- Help your business qualify for contracts with larger businesses
In other words, it can open up doors that personal credit alone cannot.
Business vs. personal credit
There are many similarities between business and personal credit, and both matter for many small businesses. But there are differences as well:
Business credit | Personal credit |
Tied to your business tax id number (EIN) and/ or credit bureau identifiers (e.g. D-U-N-S® Number) | Tied to your Social Security number and personal identifying information |
Tracked by commercial credit bureaus such as Dun & Bradstreet, Equifax Business, Experian Business | Tracked by consumer credit bureaus, such as Equifax, Experian, and TransUnion |
Can be purchased by anyone | Access limited mostly to credit purposes under Fair Credit Reporting Act (FCRA) |
Focuses on trade payments, commercial credit, and commercial loans and accounts | Focuses on personal, auto, and student loans; consumer credit cards; mortgages, |
Uses a variety of scoring models with different score ranges (varies by bureau) | Largely uses standardized scoring models (FICO, VantageScore) ranging from 350–800 |
No free credit reports required by law | Free annual credit reports required by FCRA |
Not all creditors report payments to business credit bureaus | Most consumer lenders report to all three major credit bureaus |
Business credit scores & bureaus
Business credit bureaus collect payment data from your commercial accounts and create credit reports that lenders, suppliers, and other businesses use to evaluate your company's creditworthiness. Each bureau uses different scoring models:
Dun & Bradstreet PAYDEX score
The D&B PAYDEX® score ranges from 1–100 and focuses heavily on how quickly a business pays trade accounts reported to Dun & Bradstreet. You need a D-U-N-S® Number (Dun & Bradstreet's unique identifier) and at least two tradelines with three payment experiences to generate a score.
Experian Intelliscore Plus
Experian's Intelliscore Plussm score ranges from 1–100, though the latest model (V3) uses a range of 300–850. This score can be calculated using business-only data or a blended model that incorporates the business owner's personal credit when business credit history is limited.
Equifax Risk Scores
Equifax offers several business credit scores, including the Business Delinquency Score (101–662) and Business Failure Score (1000–1604). These scores predict various risk factors like payment delinquency and business failure.
Bureau | Score range | What "good" often means |
D&B PAYDEX® score | 1–100 | 80+ (pays on time or early) |
Experian Intelliscore Plus | 1–100 | 76+ (low risk category) |
Equifax Business Delinquency | 101–662 | Higher scores indicate lower risk |
See a full list of business credit score ranges here.
Both Experian and Equifax offer blended credit scores that can analyze personal and business credit at the same time.
Building strong business credit requires establishing tradelines with vendors and lenders that do report to these bureaus. to these bureaus. Not all companies do. Learn how to establish business credit.
Why business credit matters: benefits of strong business credit
Strong business credit can transform a company's financial opportunities and help it save money in multiple ways:
- Better loan rates: Lenders may offer lower interest rates to businesses with strong credit histories
- Improved vendor terms: Suppliers may extend net-30, net-60, or net-90 payment terms instead of requiring upfront payment
- Lower insurance premiums: Insurance companies consider business credit when setting rates for commercial policies
- Stronger partnerships: Other businesses may be more willing to work with yours when they can verify your financial capability and reliability
- Higher credit limits: Banks and credit card companies may offer larger credit lines to businesses with established credit
- Reduced deposits: Utilities, landlords, and service providers may lower or waive security deposits for businesses with good credit
How to build business credit (step-by-step)
Building business credit takes time and consistent effort, but following these steps can be helpful when establishing your business foundation:
1. Form a legal entity and obtain an EIN
When possible, establish your business as a separate legal entity (LLC or corporation) and request an Employer Identification Number (EIN) from the IRS. This creates the legal foundation needed to build business credit separate from your personal credit.
You can establish business credit as a sole proprietorship (with no legal entity) but there is no legal separation between you and your business, as there is when you form an entity.
2. Open a business bank account
Consider opening a business bank account. Many small business lenders will require business bank statements to verify revenues, and a business bank account adds a level of professionalism that a personal account does not. (If you form a business entity, a separate business bank account is often essential for helping to maintain legal separation between your business and personal finances.)
3. Get a D-U-N-S® Number
Request a free D-U-N-S® Number from Dun & Bradstreet (D&B). This unique identifier is required for many business credit applications and helps ensure your accounts are properly matched to your profile in the D&B system.
4. Establish vendor and revolving tradelines
Open accounts with vendors and lenders that report payments to business credit bureaus. Not sure where to start? Consider:
If your goal is to build credit, focus on working with companies that regularly report payment history to business credit bureaus. Not all do.
5. Pay on time (or early) and keep utilization low
Payment history is the most important factor in any credit scoring model, and that’s true of business credit scores as well. Set up automatic payments when possible so you don’t miss a payment. Paying early may help your business establish a stronger D&B PAYDEX® score.
Try to avoid carrying high balances on revolving accounts like credit cards, as high utilization may affect your credit scores.
6. Monitor reports and dispute errors
Regularly check your business credit reports for accuracy and dispute any mistakes you find.
New options: Some fintech companies now offer tools that can help report additional payment data. On the consumer side, it includes options to include rent or utilities in your credit profile. On the business credit side, Nav Prime or a service like eCredable can help your business get additional tradelines that help build out your business credit history.
Learn more detailed strategies in Nav’s comprehensive guide on how to establish business credit.
How to check your business credit report
You can access your business credit reports through several methods:
Nav
With a free Nav account, you'll get business credit report summaries and letter grades.
Nav Prime (a paid option) provides detailed reports from multiple bureaus with monthly updates, along with tradeline reporting.1
Directly from bureaus
Purchase reports directly from D&B, Experian, or Equifax. Individual reports typically start at $49.95 or more.
Unlike personal credit reports, business credit reports aren't free by law, so using a service like Nav can provide cost-effective access to multiple bureau reports. Nav offers an easy and convenient way to check and monitor your business and personal credit from multiple bureaus in one place.
Frequently asked questions
Credit building results vary. Scores are calculated based on multiple factors, and some users may not see improved scores.
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Gerri Detweiler
Education Consultant, Nav
Gerri Detweiler has spent more than 30 years helping people make sense of credit and financing, with a special focus on helping small business owners. As an Education Consultant for Nav, she guides entrepreneurs in building strong business credit and understanding how it can open doors for growth.
Gerri has answered thousands of credit questions online, written or coauthored six books — including Finance Your Own Business: Get on the Financing Fast Track — and has been interviewed in thousands of media stories as a trusted credit expert. Through her widely syndicated articles, webinars for organizations like SCORE and Small Business Development Centers, as well as educational videos, she makes complex financial topics clear and practical, empowering business owners to take control of their credit and grow healthier companies.