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If you’re looking to build business credit quickly, this guide will show you how to do it.
I assume that you already have a business entity, such as an LLC. Sole proprietors and partnerships can build business credit too, but their financing options are limited.
I practice what I preach. I’ve been working in the business credit industry for over five years now, and my own business’s Dun & Bradstreet credit scores are quite good. Based on my own experience, and what I’ve learned working in this industry, this is how you can build business credit super fast.
1. Establish a Firm Business Identity
The first thing you need to do to build business credit quickly is establish a firm business identity. What this means is that your business needs to have its own name, address, phone number, and ideally its own website, email address, and social media.
The goal here is to qualify for business credit accounts without using your personal credit. To accomplish this, your financing applications need to show the lender that the business is a completely separate entity from the business owner.
This can be tricky for solopreneurs and small business owners. If you have a home-based business, you shouldn’t use your own home address.
Instead get a virtual business address. You can buy these for anywhere from $30-$60 per month. Then, use this address on your website, your articles of organization or incorporation, and lender applications.
Don’t use your personal cell phone for your business. You can get a Google voice number, or better yet, get a virtual business line. You can even get one 1-800 numbers this way.
It’s not essential to have social media for your business, but the modern consumer does expect it. Sometimes lenders will look at your business’s social media profiles in assessing your financing application.
You should have a simple website. Your email address should have the same domain as your website. There are lenders that will not except business financing applications with personal email addresses like Gmail or Yahoo email addresses.
The name, address, and EIN of your business should be the same on your government documents, your business bills, and your financing applications.
If you want to get automatic, immediate approval on your credit card applications, this information needs to be consistent everywhere.
2. Get an EIN
You want to build business credit using your EIN. This is so that you don’t have to use your Social Security number and personal credit.
It’s free to get an EIN (employer identification number). Go to the IRS’s website and sign up for one. It only takes about 3 to 5 minutes.
Many lenders will ask to see your Social Security number for Know Your Customer laws. Basically, they want to make sure that you’re not part of organized crime, and that you’re not laundering money.
Whenever possible, it’s best to leave your Social Security number off of your financing applications. If you are giving your Social Security number, read the fine print. Make sure that the lender is not checking your personal credit.
3. Get a DUNS Number
The most well-known business credit bureau is Dun & Bradstreet. They give out free DUNS numbers to businesses that apply for them.
This only takes about 10 minutes to do. Many lenders request your DUNS number with your business financing application.
Your DUNS number is your business’s identification number with Dun & Bradstreet. You need one to start building business credit.
4. Get a Separate Business Bank Account
Many lenders will reject business loan applications that only have a personal checking account.
Some lenders consider the length of your business to be when you opened your business bank account, not the date that the government uses.
Time in business requirements prevent new businesses from qualifying for most types of financing. Typically, they want to see it that a business has been around for at least two years, but sometimes they require three.
On a side note, if you don’t have a separate business bank account, it makes managing your business finances very difficult.
5. Check Your Business Credit Reports
Now that you’ve established your business identity, it’s time to check your business credit reports and scores.
You’ll want to check your scores with at least the three top business credit bureaus: Dun & Bradstreet, Experian Business, and Equifax Business.
Other business credit bureaus include Creditsafe, Ansonia, and PayNet. The Small Business Financial Exchange (SBFE) is a business credit information aggregator. They report data to the business credit bureaus.
You don’t know which credit bureaus each lender uses in the approval process, so you’ll want to check your business credit with as many as you can.
Business credit company Nav allows you to check your business credit reports and scores with Dun & Bradstreet, Experian, and Equifax. That’s a good starting place.
If your business credit is new, you may not have business credit reports to pull. On the other hand, you may find credit accounts that you didn’t know about. If there’s incorrect information on your business credit reports, you can dispute it.
Do you already have credit accounts and payments on your business credit reports? If so, that will make building your business’s credit that much easier.
6. Sign Up for a Business Credit Builder Loan
Now that you’ve checked your business credit, the main bulk of the work lies in getting new credit accounts and paying them on time.
Credit builder company CreditStrong offers a business credit builder loan. For businesses, this is the only business credit builder loan on the market. (However for consumers, there are many credit builder products.)
It works kind of like a reverse loan. You don’t get any money upfront. In fact, you’ll have to pay a small sign-up fee. Then you make monthly payments.
Depending on your plan, most or all of your monthly payment goes into a locked savings account. (Some of the monthly payment goes to interest.) At the end of your payment plan, you unlock the savings that you accumulated over that time.
Each of your monthly payments gets reported to the business credit bureaus. In this way, you can build your savings and your credit at the same time.
See Digital Honey’s highly-vetted list of business credit builder programs.
7. Sign Up for Net 30 Accounts
Net 30 accounts are vendor credit