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 13 minutes

How To Build Business Credit Quickly

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

As a savvy business owner, you already know about the importance of a good personal credit score: when you apply for a loan, it represents how reliable you are when it comes to borrowing money, and how well (or poorly) you manage your debt.

But what about your business credit score?

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

What’s the basic difference between personal and business credit score?

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.

Keep reading to know more about the particularities of your business credit score and especially how you can build business credit quickly.

How is Business Credit Score Calculated?

Essentially, business credit scores are credit-risk assessments based on borrowers’ past management of his/her 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 groups in the U.S. works out business credit scores based on the following:

  • Payment data: Do you pay your credit cards, 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 score could either be on the upside or downside, translating into whether you’re a high risk or a low-risk potential borrower.

    On a widely used, popularly accepted scale of one to one hundred (1-100), the grid would basically look something like this:

    Business credit score level measure. Set of gauge score with red, green and yellow tables.

    Credit Score Range Description of Risk
    Excelent business credit score

    76-100

    low
    Good business credit score 51-75 low to medium
    OK/Fair business credit score 26-50 medium
    Low business credit score 11-25 high to medium
    Bad business credit score 1-10 high

    You don’t want to find yourself is in either of the two 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 a Good Business Credit score Matters?

    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 from the various banks and lending institutions offering different kinds of business loans.

    Before anything else, know an important thing. These money guys don’t give out loans at the snap of a finger. They would tend to 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. That’s important and that helps too. But when you solidly build a business credit score, 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.

    If by now you are 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 your business credit score quickly. If you are not new to the game, you may want to improve your business credit score, and build business credit,  the faster, the better.

    We have created two different sections for those two purposes.

    How to Build Business Credit Fast – Tips for New Businesses

    Here’s what you can do to build business credit fast if you just started your business:

    1. LLC

    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 separated 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. 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 card

    Finally, get a business credit card and use it for dealings related to your company. These are easier to get approved versus other forms of credit or financing.

    This may look like a long list of tasks, but to tackle 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.

    How to Build Business Credit Fast – Tips for Established Businesses

    How can you improve your business credit score and 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

    From 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 your business credit score. 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

    When these people 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

    Look closely into it. 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.

    FAQs on How to Build Business Credit 

    How long does it take to build credit?

    It doesn’t take too long to build your credit By taking the proper measures and having a regular credit activity, it can take between three to six months for your file to become solid enough to allow a credit score to be calculated.

    How can I raise my credit score in 30 days?

    Besides the obvious (paying your bills on time or paying off debts), there are many tricks that can boost your credit score in just a few days. Follow these 15 tips to boost your credit fast.

    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.

    And one last thing you can do to build business credit…

    With a good credit score, you can apply for a small business loan. But, did you know that getting one is a great way to build business credit?

    If you get a loan and you use it responsibly (this is associated with good payment patterns) it becomes part of your credit history, one of the more important considerations in rating your business credit score. It’ll be a big help to further strengthen your business credit score.  

    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.

    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.

    Check if you
    qualify for a loan

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