How to Build Business Credit Fast: 6 Simple Steps

Managing company finances can be a daunting task, and credit is often one of the first areas where merchants falter. But by establishing good history, you can take an important first step in establishing a dividing line between your company and personal finances. By understanding how reporting works and keeping your score healthy, you can take control of your finances and grow your company at the same time.

How to build credit fast

1. Establish your company.

2. Register your company with your secretary of state.

3. Get your EIN.

4. Open a commercial bank account.

5. Establish net 30 tradelines

6. Borrow from lenders that report to the commercial bureaus

What is business credit, and why is it important?

It facilitates the separation of personal and company finances.

Creating company credit helps you leverage it under your company name only, which will help separate reporting from your personal credit. A business report provides you with a clean list of the company’s inquiries, LOCs, and delinquencies. It offers a clear picture of the financial condition of your company. Fraud monitoring is easier, and lenders can more effectively assess creditworthiness. Moreover, keeping your personal rating separate keeps it safe. Annual inquiries and LOCs are common so all payment history, utilization rate, and inquiries stay on your merchant report, not your personal.

Better financing options.

How much financing you are able to get may be determined by your report and score. As well, to calculate premiums for commercial insurance, some insurers examine a company owner’s credit as well as the company’s. Lastly, vendors and suppliers may review a company’s scores to decide how long they should give the company to pay open invoices from 30 days terms (net-30) to 60 days to pay under (net-60). An excellent strategy to improve cash flow is to negotiate longer terms with suppliers so you don’t have to operate on a cash basis.

How does a business credit score work?

Merchant scores are calculated using the following factors. However, each scoring model is unique, and some of these factors may be disregarded or not utilized at all.

Debt and utilization rate

Age of credit history

Payment history

Industry type

Company size

Types of tradelines

Several of the same aspects as a personal score, such as payment history and amount of debt utilized, are considered in a report. Scores, on the other hand, are calculated using various scoring algorithms. Dun & Bradstreet PAYDEX Score and Experian Intelliscore Plus scores range from 0 to 100, and the higher the score, the greater it is. The FICO SBSS score will be used for bank term loans, LOCs, and commercial loans up to $350,000 from the Small Business Administration (SBA). The minimum score to pass the SBA’s pre-screen process is currently 140.

Ways to improve your company’s credit score

Once your company is established, the next step would open Net-30 accounts, these are accounts that extend you 30 days to pay the bill in full after you have purchased products. Net 30 accounts allow you to buy now and pay later. Commonly known as vendor, supplier, or trade credit. Vendors that report those payments to commercial credit agencies help your company establish strong scores.

Each vendor account listed here offers a wide variety of products that many companies can use. By purchasing items you need for your company on payment terms and then paying on time, you may build positive references.

Here are some easy-to-start net 30 accounts:

1.– Monitor and build merchant credit with business boost $39.99/m. Payments get reported to Experian, Equifax, and Dunn & Bradstreet bureaus. Think of Nav like CreditKarma or similar monitoring apps, but for company!

2. Provides all of your print-on-demand promotional and apparel products on net 30-day terms. Create business cards, company t-shirts, or just company coffee mugs all in one place! They report to Dun & Bradstreet, Experian, Equifax, Credit Safe, SBFE, Ansonia, and NACM. There is no personal credit check. Shirtsy’s Net 30 Membership comes with an annual fee of $99 to report to the bureaus. 

3. BP Mastercard- Use this fuel card for your company vehicles and earn points and rewards for fueling with BP or Amoco stations. Monthly $8 fee, reports to Experian & Dunn & Bradstreet. After 12 months of good payment history, BP can upgrade your account to a full revolving LOC under Mastercard.

Note that while we do our best to provide you with helpful information, ultimately it is up to each company to report and we cannot guarantee any specific results by using the services of these vendors. 

Where to check your free score

While there are dozens of free score and reporting resources available for consumers, it gets tricky when you look for company versions. Dunn & Bradstreet Credit signal offers a free score, but you may not get the full picture compared to a service that requires you to pay.

In Closing…

Credit is one of the most important factors when it comes to company growth. By building good business history, you’ll be able to get the financing you need to expand your company and take your company to new heights. Make sure to follow these steps, and apply for financing options that report to the bureaus and you’ll be well on your way to explosive growth!

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