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9 Simple Steps To Build Business Credit

Build business credit with no personal guarantee with this step-by-step process.

As soon as you establish your business, you can start establishing your business credit. The earlier you begin, the sooner you can reap the benefits. However, it’s crucial to ensure that you have established your fundamental business information, such as your business name and address.

How to Build Business Credit

1. Establish a business address

Business owners with an office or retail location already know this but a business address lends credibility to your business. Plus, financial institutions and merchant services may not recognize residential or PO Box addresses as valid business addresses. While a home address may be used as your business address it can result in legal risks and privacy issues.

More importantly, if building business credit without a personal guarantee is your goal, then using your home address may create some roadblocks. 

Here are several options for creating a business address separate from your home address:

  • UPS Mailbox service. Mailing address through United Parcel Service (UPS) will give you a real street address instead of a post office box number.
  • Co-working space. A co-working space is a shared working environment where sole-proprietors, entrepreneurs, and small businesses can work in a communal setting and receive business mail.
  • Virtual Address. With a virtual business address, you can have a distinct physical address for your business, and the on-site administrators will handle your mail by sorting and distributing it to you. Depending on your preference, you can opt to receive your business mail through various methods, such as mail forwarding, on-site pickup, or mail scanning.

The key information in establishing a business address is consistency. Consistent use of whichever business address you choose helps maintain your business information integrity. Use the exact same address on every business document, application, bank account, form, magazine subscription, catalog…you get picture. You are establishing a business identity.

2. Decide the Business Legal Structure

To begin establishing business credit separate from personal credit you must structure your business as a corporation or limited liability company (LLC). It is best to consult a professional such as an attorney or accountant to make the best decision. Here are the most common ways to structure a business:

  • C-Corporation
  • S-Corporation
  • Limited Liability Company (LLC) and Partnerships are the most common
  • Sole proprietorships do not create a separate business entity

When you register your business as a legal entity with the relevant state agency, it will help build your business as a separate legal entity from yourself enabling you to apply for business credit in the business’s name.

3. Obtain the necessary licenses and permits

Obtain required business license, permits or registrations in the city or jurisdiction where you do business. When starting a new business always register your business name, even if it is a home-based business. Registering your business name locally allows you to see if someone else has registered a business in that same name. But more importantly, certain business structures call for licenses and permits from the county or city in which your business is located.

4. Get your business phone number listed

It’s important to obtain a professional and separate business line as soon as possible, and take steps to have your company phone number listed. This way, you can begin attracting new customers along with building your business credit profile. 

Here are a few places to get free basic business information made available online:

5. Obtain an Employer Identification Number (EIN)

You will need to start business credit with an EIN. An Employer Identification Number (EIN) is a unique identifier assigned by the IRS to your business for tax purposes. You can obtain an EIN by completing an online application on the IRS website.

6. Get a professional website and email address

Your business should have its own website and email address. A website helps to establish your business presence. It also acts as an informational tool. The website does not have to be all bells and whistles. Something professional and simple is sufficient.

7. Open a business bank account

Open a separate business bank account to keep your business finances separate from your personal finances. This will also help establish a relationship with a bank or credit union that may offer business credit. The business checking account should have the exact legal name and address of your business.

Some online business checking accounts can be opened with no minimum deposit required. Your business banker will be invaluable to you at some point so its important to choose a bank where a long term relationship can be built.

For business owners with ChexSystems records, you may want to consider business checking accounts that don’t use ChexSystems.

8. Get a Dun & Bradstreet Number

Dun & Bradstreet is the largest tracker of business credit. There are other business credit companies, mainly Experian Business and Equifax; however, Dun & Bradstreet is probably the most widely used company in the industry.

The DUNs number is a nine-digit identification number that provides unique identifiers of business entities. The importance of a DUNs number relates to your business credit score called PAYDEX.

Your PAYDEX credit score is connected to your DUNS number, and it is one of Dun & Bradstreet’s credit scoring systems for businesses. The PAYDEX score, which ranges from 0 to 100, is determined by your payment history as reported by suppliers. This information is used to evaluate the likelihood of your business paying back loans and other debts promptly.

You can apply online for at Dun & Bradstreet for a DUNs number free of charge but it may take up to 30 days to receive. The expedited service for a DUNs number will cost you $229 but it will be available within 5 days.

Before you apply for a DUNS number, check to see if your business already has one. You can check at the D&B D-U-N-S Number Lookup page. 



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