Smiling young female florist standing in her flower shop checking online orders with a digital tablet. Concept: how to build business credit.
Suzanne Llanera
By: suzanne_llanera
Read in 17 minutes

How To Build Business Credit Quickly

If you are wondering how to build business credit fast, you have landed in the right place.

The importance of a good personal credit score is undeniable: it represents how reliable you are when borrowing money and how well (or poorly) you manage your debt.

But what about your business credit score?

The truth is, your business score is just as important as your personal credit history. Business owners often are not aware of this, and many times their business loans get rejected because of a poor business credit score.

In this article, we’ll discuss the particularities of your business credit score and especially how to build business credit quickly. We’ll also tell you what’s the best way to build business credit.

woman reviewing a report by the business credit reporting agencies

What’s the difference between the personal and business credit scores?
The basic difference is this: while personal FICO scores range from 300 to 850, business FICO credit scores generally range from 0 to 100. They are established in different ways -one analyzes your personal solvency, another one the solvency of your business- and reflected in different reports.

How is Your Business Credit Score Calculated?

Essentially, business credit scores are credit-risk assessments based on borrowers’ past management of their credit or loans. It’s used as a tool to help banks, businesses, investors, and other loan providers make good decisions about the kind of people they should or should not deal with, do or not do business with.

Experian, one of the most respected, reliable credit reporting agencies in the U.S., works out business credit reports based on the following:

  • Payment data: Do you pay your business credit card, loans, and other debts on time? Have you been delinquent on your payments? How often? How many of these accounts are delinquent? What’s the percentage?
  • The number of times your accounts may have been turned over to collection agencies
  • How you use your credit: Do you spend your loan or credit in one big swoop? How much of it is presently in use? Against your credit limits, what’s the ratio of your delinquent balance? Is it high or low?

Depending on the information garnered from this assessment, your business credit history could either be on the upside or downside, translating into whether you’re a high-risk or a low-risk potential borrower.

Below we share a popularly accepted scale of one to one hundred (1-100), widely used by the major business credit bureaus.

Business Credit Score Rating

Learn if you have a low or a high business credit score with this table:

Business credit rating measure
Credit Score Range Credit Rating Description of Risk
very happy green face

76-100

Good Low risk
happy green face 51-75 Fair Low to medium risk
serious yellow face 26-50 Bad Medium risk
sad orange face 11-25 Bad High to medium risk
very sad red face 01-10 Bad High risk

You don’t want to find yourself is in either of the 3 lowest ranks. The higher your number is, the more probabilities you’ll have to enjoy access to affordable loans and credit, some great preferential treatment, and possibly better terms and conditions when you do decide to take out a small business loan.

Why does a Good Business Credit Score Matter?

At any point during the life of your business, you may have to start seeking additional funding to support your development plans. You can seek capital from either new investors or the various banks and lending institutions offering different business loans.

Before anything else, know an important thing. These money guys don’t give out loans at the snap of a finger. Instead, they look closely at your background and determine if you’re a high-risk or a low-risk borrower.

Your credit score is how lenders rate creditworthiness.

Of course, and as we have mentioned, you’ve got your own personal credit score. But when you solidly build a business credit report, it will greatly help you get lower interest rates when applying for loans.

A solid business credit score will help you cut down those tricky situations where you’ll need to pay upfront for products or services. And with those big suppliers, chances are you’ll get better terms and conditions.

All of the reasons above are why it’s important you learn how to build business credit. Don’t worry, keep reading to learn the fastest way to do it.

How to Get Business Credit

Are you now convinced of how important it is to build a business credit score? Just keep reading.

  • If your business is new, first, you’ll have to find ways to establish business credit.
  • If you are not new to the game, you may want to improve your business credit report and build business credit; the faster, the better.

We have created two different sections for those two purposes.

business credit rating in a smartphone

5 Steps to Building Business Credit for New Businesses

If you just started your business, you need to establish business credit.

This is how to build business credit fast:

1. LLC

Learning how to get business credit is crucial. Firstly, try to incorporate or form and organize your business into an LLC (Limited Liability Company). This will allow your business to be perceived and regarded as an entity separate from your personal finances.

2. EIN

Get an Employer Identification Number from the federal business bureau. Use it as often as you can for all your business transactions.

3. Opening a business bank account

In any of your preferred banks, open a business bank account, making sure you use your legal, legitimate company name.

4. Business telephone and P.O. number

What should also help is setting up a separate, dedicated business telephone. Add on a P.O. Box number.

5. Business credit

Finally, apply for business credit, like a small business loan. Don’t worry, there are lenders out there that are willing to approve a loan even if you don’t have a previous credit history. This means that, with your timely payments, you will start creating a strong business credit score.

Camino Financial is one of those lenders that help business owners that don’t have previous credit histories. We want to see you become a successful business owner!

Apply For A Business Loan!

 

Following these tips is the fastest way to build business credit.

And while this may look like a tedious list of tasks, tackling all of them should take you just a few days. The whole point behind these tips is to put your company on the map. You need to get people, suppliers, and other businesses to see it moving as an enterprise and have its presence somehow felt in the industry and the various circles in which your company moves, interacts, and transacts business.

In other words, beyond hanging out a sign that says “Open For Business,” your business has got to exist in the public eye. It has got to demonstrate that it’s a fully functioning business and is, therefore, qualified for business financing.

5 Steps to Building Business Credit for Established Businesses

How to build business credit quickly? Here are some things that will help if your business is established, but you need to build business credit fast and as soon as possible:

1. Make timely payments

By paying your bills earlier than when they’re due, you’re not going to get any complaints.

Payments on time? Perfect.

Late? As far as business credit scores are concerned, “late” is not such a good word. It’s a definite no-no!

The payment patterns and habits you develop become a driving force that will make or break business credit reports. Paying your debts on the dot will strongly tell bankers and other businesses like vendors and suppliers that your company knows how to pay its bills and should get your business credit score soaring.

2. Make sure your debt to income situation is always in top shape

In other words, you shouldn’t let your bills go beyond your disposable income. If and when you do, the loan giver will see you as high risk and avoid you like the plague. Manage your debts carefully and consistently pay them on time or pay them off completely so you’ll have a well-balanced picture of what you earn and what you owe.

3. Don’t compromise your personal credit by using it for your business needs

When it comes to your business credit score, remember that personal credit also comes into play. So keep your personal debts in check. manage them closely and shy away from unnecessary credit inquiries.

4. Develop good relations with your suppliers and service providers

There are many suppliers that help build business credit. And, when they allow you to avail of products or services and paying after several days or a couple of weeks, you’d be enjoying something known as trade credits. And trade credits, when reported to the credit reporting agencies, become like rockets that’ll prop up your business credit score.

5. Monitor, review and assess your credit report

This is the last of the steps to building business credit. You need to look closely into your credit report. Are there any issues or gray areas that might potentially bring down your business credit score? Spot them early, analyze and work out the right way to address them, and sort of nip the problem in the bud.

Now you know how to build business credit fast!

man building and establishing business credit

Building Business Credit Fast: Business Credit Card vs. Business Loan

Once you know how to build business credit, you can decide what kind of financing you need for your business. If you want a credit card to increase your score, then that seems like a correct choice, but if you want the score to access one of those cards and finance your business, you might put yourself in a corner.

A business credit card is meant for small purchases or work-related emergencies. However, if you are thinking about buying new heavy machinery, remodeling your store, financing inventory, or other major investments, you’ll face high interest with those cards, and in the end, everything will be more costly.

Once you’ve had a business credit card, used it wisely, made the payments correctly, etc. You should consider accessing a small business loan to achieve the business plans you’ve been thinking about. Of course, you can also obtain a loan without having had a business credit card before, as long as your business is doing well.

Business credit cards vs. Camino Financial business loans

Let’s put it this way, business credit cards are for whatever you could need right now, and small business loans are for benefits you’ll see in the short or medium term. Plus, they help you establish business credit.

The Best Way to Build Business Credit

With a good credit score, you can apply for a small business loan. But, when learning how to build business credit, you might be surprised to learn that getting a loan is a great way to build business credit.

Want to know how to build business credit? Well, if you get a loan and use it responsibly (this is associated with good payment patterns), it becomes part of your credit history. As a result, it’ll be a big help to further strengthen your business credit score.

A loan is definitely the best way to build business credit because it also gives you the capital you need to grow your business.

If a loan is what you need (both to strengthen your business credit score and to invest in your small business), we’ve got you covered. We’re one of the companies that help build business credit.

Submitting your loan application with Camino Financial will take you just a few minutes and won’t affect your credit score. Furthermore, if you don’t have a credit history, don’t worry; we can still give you a loan.

Apply now!

 

FAQs on How to Build Business Credit 

How long does it take to build business credit?

It doesn’t take too long to build your credit.

Taking the proper measures and having a regular credit activity can take between three to six months for your file to become solid enough to allow a credit score to be calculated.

Learn here more about how long it takes to build credit.

Can I raise my credit score in 30 days?

Besides the obvious (paying your bills on time or paying off debts), many tricks can help you build business credit in 30 days. Follow these 15 tips to boost your credit score.

How can I build my credit fast with no credit?

We recommend you open your first credit card account. Look for a card with a low spending limit or a secured credit card: they will be easier to qualify for if your credit history is limited.

#CaminoTip
Make small purchases that you can easily pay off right away, and pay the balance in full every month.

Does having 2 credit cards build credit fast?

It can, if you follow some golden rules: keep your credit utilization below 30% of the credit limit and always pay your balances in full every month.

How to build business credit without using personal credit?

Fortunately, there are several financial products that don’t consider your personal credit score, only your business credit score.

Here’s how to build business credit: business credit cards are a great way.

Why? Some issuers don’t ask for your SSN when applying for a commercial credit card; they ask for your EIN (in other words, they don’t do a personal credit check). This means that the application depends on your business credit score and that using the card will affect (positively or negatively) your business credit score.

How to start establishing business credit?

To start working on your business credit history, follow some of these tips:

  1. Register your business entity and get a dedicated business phone number and address
  2. Get an employer identification number (EIN)
  3. Open a business banking account (and never mix your personal and business accounts)
  4. Get a business loan or credit card from a lender that reports to business credit bureaus

Can I improve my business credit score with the help of a loan?

Yes, you can!

Just make sure that the lender reports your payments to the business credit bureaus.

At Camino Financial, we report your payments to Experian, which means you’ll improve your credit score with every timely payment you make.

We want to see you grow and thrive, apply for a business loan, and start building a successful future!

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