4 ways to build business credit

Grow your business

Looking to start or expand your own business? Here are four ways you can start establishing credit to help your business succeed and grow.

1. Understand the importance of a business credit score.

A business credit score indicates how likely your business is to repay debt. While it may sound similar to your personal credit score, the two numbers are calculated very differently. Vendors and suppliers look at your business credit score when setting up a line of credit Go to Truist Small Business Lending. And they’ll likely put more emphasis on your business credit score than on your personal credit. The same is true when applying for a business credit card Go to Truist Small Business Credit Cards or a loan Go to Truist Small Business Loans.

The size of your business also matters. If you have fewer than 25 employees, your personal credit score as the business owner will be a higher factor than it would for a larger business.

2. Get recognized by business credit bureaus.

Your personal credit score starts building as soon as you start making credit transactions. But with business credit, the process is different. Sole proprietors aren’t eligible for business credit. To qualify for business credit, you need to set up a legal business entity, such as a C-Corporation (C-corp), S-Corporation (S-corp), or LLC. Work with your business lawyer or accountant to determine which structure is best for you.

Next, your business needs an EIN, or Employer Identification Number. Also known as your federal tax ID number, this is the identifier that business credit bureaus will use to track your business’s credit transactions. You can apply online for an EIN through the IRS website Go to the IRS website.

The three main business credit bureaus—Experian, Equifax, and Dun & Bradstreet (D&B)—recommend opening a business bank account and setting up a dedicated phone line registered under your business name to help creditors validate your business information.

Keep in mind that Experian and Equifax will recognize you the first time trades are reported to them, but D&B won’t. Instead, they will give your business its very own DUNS number. Many credit applications will ask specifically for that number, which you can obtain directly from D&B for free within 30 days, or faster using their expedited service.

3. Get (and use) a business credit card.

After setting up your business as an S-corp, C-corp, or LLC, get a business credit card Go to Truist Small Business Credit Cards. By making regular transactions and paying them off on time, you’ll improve your business credit score. Business credit cards can help you manage cash flow, track spending, and increase your purchasing power. You'll find a variety of cards that offer rewards such as cash back or travel miles, as well as benefits like protection against unauthorized purchases.

Regardless of the business credit card you choose, make sure it fits your specific needs and makes the most of your spending. To build business credit, you’ll need to use your business credit card consistently and responsibly.

4. Develop good financial habits.

One of the common challenges small businesses face is the occasional need to access additional cash. Whether you face a large seasonal order or a slow-paying customer that puts a crimp in your cash flow, short-term challenges are typical for business owners.

To put yourself in the best possible position for future borrowing, it’s essential to establish business credit quickly. You’ll also want to manage business finances carefully to ensure that your credit builds into an asset for future business growth. That’s as simple as paying bills on time and in full, and not over-relying on credit.

Building your business credit score can pay off in a big way, giving you more options to grow your business in the months and years to come.

Learn what’s right for your business.

Contact your local Truist banker for more information about managing and growing your business.