How Long Does It Take To Build Business Credit?

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Reviewed by Matt Pelkey
• 4 minute read

Building business credit is a crucial step for any business owner. It can help to establish financial stability and credibility. However, the timeline for establishing a robust credit profile can vary based on several factors. From understanding where to start and the tools available to expedite the process, to grasping the importance of a solid business credit score, this guide can help you build a foundation for a good business credit score.

How Long Does It Take to Build Business Credit?

Building business credit can take anywhere from a few months to a few years. Unlike personal credit, which can be established relatively quickly, business credit typically takes longer due to the different factors involved. These factors include the size and type of your business, your industry, financial practices and your commitment to maintaining a positive credit history.

Establishing a solid business credit history often begins with opening accounts specifically under your business’s name. Initially, creditors may request personal guarantees or rely on the small business owner’s personal credit score until the business demonstrates its creditworthiness.

How Do You Start Building Business Credit?

To start the process of building business credit, you’ll need to register your business as a separate legal entity with the IRS. This includes obtaining an Employer Identification Number (EIN) and identifying your business structure, generally as a limited liability company (LLC) or corporation. Remember, if you’re a sole proprietor, your business doesn’t qualify as a separate legal entity.

Next, open a business bank account to manage finances separately from personal accounts. A business checking account helps keep a clear distinction between the business owner and the business entity.

Once these foundational steps are in place, consider business loans, lines of credit or other credit accounts with companies that report payment history to business credit bureaus. Timely payments and other good credit management habits on these accounts can showcase a positive track record of your business’s reliability and contribute positively to your credit profile.

What Are the Best Tools to Build Business Credit?

Several tools can speed up the process of building business credit. Business credit cards, when used responsibly, can aid in establishing credit history and offer financial flexibility. Secured credit cards or cards specifically designed for small businesses are often accessible options for new businesses aiming to build credit. Additionally, developing partnerships with suppliers and vendors that report payments to business credit bureaus can significantly impact your credit profile.

How Do You Build Business Credit Fast?

While there isn’t a shortcut to instantly build business credit, certain strategies can accelerate the process. Consistently making timely payments on credit accounts, keeping credit utilization low, diversifying credit types, and staying cash flow positive contribute positively to your credit profile.

Another effective way to expedite the process is by establishing a strong credit history through responsible financial behavior. Paying invoices early or on time, maintaining a positive relationship with creditors and avoiding excessive debt can enhance your business’s creditworthiness over time.

Does My Business’s Credit Score Start at Zero?

Not necessarily. A business credit score of zero is more likely to represent bankruptcy than it is to represent a lack of business credit history. The way a business credit score is calculated will vary depending on the business credit bureau issuing the score. Over time, as the business opens credit accounts and demonstrates responsible financial behavior, its credit score starts to reflect its creditworthiness.

Why Do I Need to Build Business Credit?

Building business credit is essential for several reasons. It helps separate personal and business finances, and can reduce the business owner’s personal liability. A strong business credit profile enhances credibility with lenders, suppliers and potential partners. Moreover, it can facilitate access to better financing terms, larger loan amounts and higher credit limits, enabling business growth and expansion.

How Do I Access My Business Credit Report?

Accessing your business credit report is important if you want to understand your business’s creditworthiness. You check your business credit and get your business credit report through the major business credit bureaus like Dun & Bradstreet, Experian Business, or Equifax Small Business.

Start by visiting the respective bureau’s website and follow their guidelines for requesting a report. You’ll likely need to provide business details such as your EIN, business name, address, and possibly financial statements for verification.

Upon receiving your report, review it for accuracy and any discrepancies that could impact your business’s credit score. Address any errors by contacting the credit bureau to dispute and rectify the information.

Regular monitoring of your business credit report helps you stay informed about your credit standing, track changes, and make informed financial decisions to manage your business’s credit health effectively.

The Bottom Line

The timeline to build business credit varies, but the process involves establishing a distinct legal entity, managing finances prudently, and consistently showcasing creditworthiness. Leveraging the right tools and practicing responsible financial behavior are instrumental in expediting the journey to a robust business credit profile. Understanding the significance of business credit and actively working towards its development is a strategic investment for the long-term success of any business.

This content is for educational and informational purposes only, and is not intended as financial, investment or legal advice.