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Business Credit. How to Build It.

Establishing Business Credit

Upon opening a business credit card or loan in your company's name, the lenders will report your accounts and payment history to three business credit bureaus - Experian, Dun & Bradstreet (D&B) and Equifax.

Experian will compile a business credit file, which can be accessed by lenders and partners to evaluate the risk of doing business with you. Your business credit history will include any public records, such as liens, judgments or bankruptcy, and demographic information like your SIC code, years on file, and business size. To build a positive business credit history, it's crucial to make timely payments and keep your credit utilization low.

In simple terms, business credit indicates your company's capacity to manage its finances, debt, and purchasing capabilities.

Calculating Business Credit Report

Although different credit reporting companies may use various rating scales, popular ones such as Experian's Intelliscore Plus and D&B's PAYDEX Score use algorithms that rank scores from 1 to 100. Generally, higher scores correspond to better business credit. For instance, if your D&B PAYDEX Score is 80 or above, it indicates that you make timely or early payments.

To calculate business credit scores, several factors may be considered, but their weightage and usage can differ across different scoring models. These factors include:

  • payment history

  • age of credit history

  • debt and debt usage

  • industry risk

  • company size

Among these factors, payment history carries the most significance as it determines whether your business pays its bills on time. In some cases, credit scores are primarily based on payment history.

Sample Experian Intelliscore Plus Business Credit Report:

Sample D&B PAYDEX Credit Report:

Build It

Put your business credit card to use. After setting up your bank account and commencing business operations, you can open a business credit card and use it on a regular basis. It's advisable to research and select a credit card that suits your business requirements, as some cards may offer rewards that are beneficial for specific types of businesses. Initially, your credit limit may be low, particularly if you are a new business owner. However, as you build your credit score over time, your credit limit will gradually increase.

Use Trade Credit. It is typical for companies to adopt the practice of offering trade credits to customers, granting them a payment period ranging from 30 to 120 days. The payment transaction is documented in an invoice that specifies the details of the trade credit, such as the payment terms and total amount due. This type of accounts-payable agreement can help enhance your business credit score, as long as your supplier reports your payments to a business credit bureau.

It's possible to establish trade lines with smaller vendors like your office supplies or water distributor. In case they don't report to a credit bureau, you can include them as a trade reference on your account, and Dun & Bradstreet will follow up to gather your trade data.

Pay it off early. When it comes to building credit, paying your bills is one of the most powerful tools at your disposal. By settling your bills promptly and in full, you demonstrate your ability to honor your financial obligations. Moreover, if you pay your bills ahead of the due date, you may be able to accelerate the process of establishing your business credit score. Essentially, credit is an agreement between you and a lender, where you receive a product, service or access to funds, and you pay for it later. Therefore, when your bills become due, ensure that you settle them promptly, as this is the fundamental principle behind building credit.

Keep an eye on credit utilization. Credit utilization is a crucial element of establishing a credit score. Similar to personal credit cards, business credit cards also have a suggested usage rate that enables you to optimize your credit score. It is generally recommended that business owners utilize no more than 30% of their total credit limit. By doing so, you demonstrate to lenders that you are financially responsible and capable of meeting your minimum balance each month.


Establishing a business credit score is crucial for maintaining a financially sound and thriving enterprise. It demonstrates to lenders and other businesses that your company is financially stable and capable of meeting important payment obligations. Not only does it increase your chances of securing loans, but it can also enable you to avoid prepayment penalties. Additionally, a solid credit score can serve as a bargaining tool, allowing you to negotiate lower prices or more favorable interest rates and terms on financing packages offered by banks and online lenders.


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