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 16 minutes

How to build business credit: the definitive guide

If you wonder how to build business credit quickly, you have come to the right place. Business credit is a great tool to consider in your company.

In this way, a good personal credit score is undeniable: it represents how reliable you are when borrowing money and how well you manage your debt.

But what about your business credit score?

Your business score is just as important as your personal credit history. Business owners often are not aware of this. Their business loans can get rejected because of a poor business credit score.

This article will discuss the features of your business credit score and how to build business credit quickly. We’ll also help you to build a business credit score.

 

Woman watching her credit report

What’s the difference between the business and personal credit scores?

The primary difference is that while personal FICO scores range from 300 to 850, business FICO generally ranges from 0 to 100. They work in different ways -one analyzes your finances, another one your business solvency.

How is Your Business Credit Profile Calculated?

Business credit scores are risk assessments based on borrowers’ past management of their credit line or loans.

It’s used as a tool to help loan providers to make good decisions about the kind of people they should or should not deal with.

Experian, a reliable credit reporting agency in the U.S., track business credit and works out 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?
  • Collection agencies: The number of times your accounts reach these agencies.
  • How you use your credit: Do you spend your loan or credit in one big swoop? How much of it is in use? Against your credit limits, what’s the ratio of your delinquent balance? Is it high or low?

Depending on the information, your business’s 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 an accepted scale of one to one hundred (1-100), widely used by the major business credit bureaus.

Apply now!

Business Credit Score Rating

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

Credit Score RangeCredit RatingDescription of Risk
76-100GoodLow risk
51-75FairLow to medium risk
26-50BadMedium risk
11-25BadHigh to medium risk
0-10BadHigh risk

You don’t want to appear in either of the three lowest ranks. The higher your number is, the more probabilities you’ll have to enjoy access to a business line of credit.

You will have preferential treatment and better terms when you decide to take a small business loan.

Why does a Good Business Credit Score Matter?

You may have to start seeking business credit to support your development plans at any point during the life of your business.

You can seek capital from new investors, banks, and lenders that offer 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 at your background and determine if you’re a high or a low-risk borrower.

Your credit score is how lenders rate creditworthiness.

Of course, you’ve got your personal credit score, and as we have mentioned. But when you build a business credit report, it will 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.

The above reasons are why learning to develop your business credit is essential. Don’t worry, read on for the ways to do it.

How to Get Business Credit

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

  • 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.

Mobile app reporting an excellent credit score

5 Steps to Starting Business Credit for New Businesses

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

This is how to build your business credit fast:

LLC

Learning how to get good business credit is crucial. First, try incorporating and organizing your business into an LLC (Limited Liability Company).

This will allow people to perceive your business as separate from their personal finances.

EIN

Get an Employer Identification Number from the federal business bureau. Use it as often as you can for all your business transactions, this is how to build business credit using an EIN number.

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.

Business telephone and P.O. number

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

Business credit

Finally, you are ready to 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. You will start creating a solid business credit profile with your timely payments.

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 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, vendors, and others to see you move like a business. Also, your presence feels in some way in the industry and the circles in which your company operates.

In other words, beyond hanging a sign that says “Open for Business,” your business must exist in public view.

You have to show that you are a fully functioning business and qualify for business financing.

5 Steps to Building Business Credit for Established Businesses

How to obtain business credit simply? Here are a few things to help you with your established business, but you need to build business credit ASAP:

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? When it comes to business credit scores, “late” is not such a good word. It’s definitely a no-no!

The payment habits you develop become a driving force that will make or break business credit reports.

Paying your debts on the dot will firmly tell bankers and other businesses that your company knows how to pay its bills and should get your business credit profile soaring.

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. The loan giver will see you as high risk and avoid you like the plague when you do.

Manage your debts carefully and pay them on time or pay them off entirely so you’ll have a positive business credit history.

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

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

Develop good relations with your suppliers and service providers

Many suppliers help build credit. And, when they allow you to avail of products or services and pay after several days or a couple of weeks, you’d be enjoying something known as trade credits.

When reported to the credit reporting agencies, trade credits become like rockets that’ll prop up your business credit scores.

Watch, review and assess your credit report

This is the last step in obtaining business credit. You need to look better into your credit report.

Are there any issues or gray areas that might 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!

A man who learn how to build business credit

Build 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, that seems like a correct choice. But if you want the score to access and finance your business, you might put yourself in a corner.

business credit card can work for small purchases or work-related emergencies.

However, if you are thinking about buying a making some improvements in your business, 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, use it wisely and make the payments correctly. Also, you should consider accessing a small business loan to achieve the business plans.

Of course, you can also obtain a loan without having had a business credit card before, as long as your business finances are doing well.

Learn here about 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. 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

When learning how to start building business credit, you might get a surprise to learn that getting a loan is a great way to build business credit.

Do you want to know how to generate commercial credit? Well, if you take out a loan and use it responsibly (associated with good repayment patterns), it becomes part of your credit history.

As a result, it will be of great help to further strengthen your business’s credit rating.

A loan is one of the best ways 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.

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

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 steps and having regular credit activity can take three to six months for your file to be strong enough to calculate a credit score.

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 do I build my business credit fast with no credit?

We recommend that you open your first credit card account. Look for a card with a low spending limit or a secured credit card – it will be easier to qualify for them if you have a limited credit history.

Does having two credit cards build credit fast?

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

How to build a business credit score without using personal credit?

Fortunately, some credit products don’t consider your personal finance, 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. 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.

 

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