Home > Credit 101 > Establishing Business Credit: The Ultimate Guide to Improving Your Business Credit Score in 2019

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If you’re an entrepreneur, having a great business credit score can really help you. Yo’ll have easier access a business loan or line of credit. A high business credit score also helps you receive lower rates on loans and insurance. This leads to more savings for your company.

So, how do you go about establishing good credit for your business?

How to Establish Business Credit

Even if you don’t know it, you likely already have several business credit scores. Credit bureaus like Experian, Equifax, and Dun & Bradstreet gather information on businesses and calculate credit scores. As soon as you have established your credit with these agencies, you can work on improving them.

The Credit Agencies

As we already mentioned, the three major agencies who calculate your business credit score are Experian, Equifax, and Dun & Bradstreet. Although Experian and Equifax provide personal credit scores and reports, your business credit score is completely separate. Below, we’ve summarized how these bureaus score you.

  • Dun & Bradstreet

They give their users what they refer to as a PAYDEX score. It ranges from 1 – 100. This score is based on whether you make payments on time to your creditors. To get a Dun & Bradstreet score, you need a D-U-N-S number and an active trade line with at least three vendors.

  • Equifax

Equifax has several different types of business credit scores but they can be broken down into two categories. The Delinquency Scores predict the rate of delinquency on accounts. The higher the Delinquency Score, the lower the risk.

 

The second category includes the Equifax Business Failure Scores. This indicates how likely it is a business will fail in a 12-month period. To get a credit report for your company, Equifax asks you incorporate an LLC, get a federal employer identification number, open business accounts in your legal business name and have a phone line registered to your business.

  • Experian

Experian gives scores ranging from 1 – 100. This is called the Intelliscore Plus from Experian.  This score shows the risk of a business to vendors and lenders. A higher score is better. To get an Experian business score, you need a trade line or a demographic element like years on file or business size.

Registering for numbers & Titles

Assuming the agencies do not have ample information on your business to give you a whole credit report or a score, you don’t have to worry. By registering your business for a couple of designations you may be able to get one:

  • D-U-N-S Number
  • Employer Identification Number
  • Limited Liability Company

Open Business Accounts

Opening a business account with your business’s legal name will get your business on the credit agencies’ radar. Here are some accounts you can open:

  • Business bank account
  • Business phone line (listed)
  • Business credit card or loan

Having a business credit card can help build your business’s credit score. Some things to remember are to practice good credit habits like ensuring your debt-credit ratio remains low and make payments on time.

Business Loans & Credit Score

Getting a small business loan can help you improve or build your business’s credit. But if you do not have any business credit or you have bad credit, getting a business loan can be very difficult. If this happens to you, other options are taking out a loan in your personal name or getting a lender that doesn’t need your credit score.

Other things to do

Here are a few more things to do to improve your credit score:

  • Improve your personal credit (lenders could decide to go through your personal as well as business credit).
  • Repair your credit if it’s damaged.
  • Stay away from all behaviors that point at risk, like paying accounts late.
  • Keep revolving debt low.

Conclusion

Having a great business credit score can have huge benefits. You’ll likely have fewer borrowing restrictions, access lower interest rates, reduce your personal liability, keeping your personal credit safe. Remember that it’s important to do your research on what types of loans or lines of credit you can qualify for. It’s also important to monitor your business credit score to see where you stand so that you don’t encounter problems in the future.

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