How to Build Business Credit Quickly: 5 Simple Steps (2024)

By Marco Carbajo

Published on

Building business credit plays a crucial role in your company’s funding ability. Whether you operate as a limited liability company or corporation, your business has the ability to establish a credit file separate from you as an individual.

When you register a business (LLC, LLP or corporation) it becomes recognized as a separate legal entity with the ability to enter into contracts. It’s treated as a separate being from you as an individual.

If you operate as a sole proprietorship, it’s important to understand there is no legal or financial separation between you and your business. If that’s the case, when you obtain credit or apply for funding, all activity will be solely tied to you as an individual and reflected on your personal credit reports.

To keep your business and personal finances separate, the first step is to start building credit in your company’s name. If you want to build business credit quickly here are five simple steps.

Step 1 – Choose the Right Business Structure

To make your business a distinct legal entity requires that you select a business structure such as an LLC, LLP or corporation. Remember, sole proprietorships do not create a separate business entity.

Once you form your business entity, the next step is to register your business. This particular step is dependent on your structure and where your business is located.

For additional support on choosing the right structure for your company and registration be sure to check out SBA’s Business Guide.

Step 2 – Obtain a Federal Tax ID Number (EIN)

You can apply for a federal tax ID for free using the IRS assistance tool. This is a nine-digit number assigned to your company which you will use for things such as filing company tax returns, opening a business bank account, applying for licenses and permits, and applying for business credit.

Step 3 – Open a Business Bank Account

Once you have your federal tax ID, you’ll want to open a business bank account for your company. This is a mandatory step in creating a clear separation between your business and personal expenses.

Your banking relationships play an important role in your company’s funding potential. Not only does your business bank account serve as a bank reference on credit applications, it also allows provides key data that lenders use during a funding review.

Step 4 – Establish Credit with Vendors/Suppliers Who Report

One of the easiest ways to build business credit is to apply for net terms with vendors and suppliers. As you buy supplies, inventory, or other materials on credit, those purchases and payments get reported to business credit reporting agencies.

This activity creates your company’s credit profile and business credit report. After your company has several trade lines reporting, a business credit rating (score) is generated.

Remember, it’s important to select vendors and suppliers that report to a business credit reporting agency. Each relationship you have also serves as a trade reference that can be used on future credit applications as well.

Step 5 – Monitor Your Business Credit Reports

There are three major business credit reporting agencies so it’s important to monitor each of your company credit files. Each agency collects data from various sources and may have different information about your company.

The good news is each of the business credit agencies provide a way for you to update basic information about your business. If you uncover any outdated or incorrect information, you’ll want to contact the agency to make the appropriate change.

With an established business credit report, you may get higher credit approvals, better interest rates and repayment terms on loans and lines of credit.

It’s equally important to establish a diversity of accounts with other types of business credit such as a business credit card or line of credit. Let these five simple steps serve as a starting point to building business credit for your company.

About the author

How to Build Business Credit Quickly: 5 Simple Steps (1)

Marco Carbajo

SBA Blog Contributor

Marco Carbajo is a business credit expert, author, speaker, and founder of the Business Credit Insiders Circle. He is a business credit blogger for Dun and Bradstreet Credibility Corp, and

Read more about Marco Carbajo

How to Build Business Credit Quickly: 5 Simple Steps (2024)


What's the fastest way to build business credit? ›

If you want to build business credit quickly here are five simple steps.
  1. Step 1 – Choose the Right Business Structure. ...
  2. Step 2 – Obtain a Federal Tax ID Number (EIN) ...
  3. Step 3 – Open a Business Bank Account. ...
  4. Step 4 – Establish Credit with Vendors/Suppliers Who Report. ...
  5. Step 5 – Monitor Your Business Credit Reports.
Dec 5, 2019

What are the 5 steps to establish credit? ›

Here are five ways to build credit starting today.
  • Pay on time, every time. One of the fastest ways to build good credit is by paying your bills on time. ...
  • Lower your credit utilization rate. ...
  • Explore alternative lending options. ...
  • Review your credit report. ...
  • Protect yourself.

How does an LLC get credit? ›

Here are some important LLC credit building strategies to consider.
  1. Pay bills on time. Paying your bills on time is one of the best ways to maintain good credit. ...
  2. Monitor credit reports. ...
  3. Keep your credit utilization low. ...
  4. Communicate with creditors. ...
  5. Regularly review financial statements. ...
  6. Update information with credit bureaus.
5 days ago

How do I build credit ASAP? ›

9 ways to build credit fast
  1. Understand the concept of credit. ...
  2. Check and monitor your credit. ...
  3. Dispute credit report errors. ...
  4. Open a credit card account. ...
  5. Take out a credit-builder loan. ...
  6. Become an authorized user. ...
  7. Request a credit limit increase. ...
  8. Keep a mix of different account types.
Apr 11, 2024

How to build credit for new LLC? ›

Building Credit History

This means making purchases on credit and paying the bills on time, which can help demonstrate your business's creditworthiness. Your LLC can also apply for a business credit card, which can help separate personal and business expenses while establishing a credit history for your company.

How can I build credit in a newly started LLC? ›

Eight steps to establishing your business credit
  1. Incorporate your business. ...
  2. Obtain an EIN. ...
  3. Open a business bank account. ...
  4. Establish a business phone number. ...
  5. Open a business credit file. ...
  6. Obtain business credit card(s) ...
  7. Establish a line of credit with vendors or suppliers. ...
  8. Pay your bills on time.

What are the 5 C's of credit? ›

The five Cs of credit are important because lenders use these factors to determine whether to approve you for a financial product. Lenders also use these five Cs—character, capacity, capital, collateral, and conditions—to set your loan rates and loan terms.

What are the 5 C's of credit granting? ›

The five Cs of credit are character, capacity, capital, collateral, and conditions.

What are the 5 C's of credit approval? ›

The lender will typically follow what is called the Five Cs of Credit: Character, Capacity, Capital, Collateral and Conditions. Examining each of these things helps the lender determine the level of risk associated with providing the borrower with the requested funds.

Can I use my EIN to buy a car? ›

Yes, it is possible to buy a car with an EIN number, you just need to be sure to clarify with the sales team that this is your intention. When buying the car, make it clear that it's a business purchase of the vehicle, not a personal one as this impacts which credit application you'll have to fill out.

How do owners of LLC pay themselves? ›

You have several options to pay yourself from an LLC, including salary, wages, profit distributions and independent contractor pay. You can also abstain from taking any pay if you want to keep the money in the business or the business isn't generating enough revenue to pay you.

Can I use my EIN to apply for credit? ›

The answer to that question is yes. You can sign up for a business credit card using only your Employer Identification Number (EIN), without having to provide your Social Security Number (SSN).

How can I build my credit fast with none? ›

7 Ways to Build Credit if You Have No Credit History
  1. Become an authorized user.
  2. Try a credit-building debit card.
  3. Apply for a secured credit card.
  4. Apply for a credit-builder loan.
  5. Apply for a store credit card.
  6. Have rental payments reported.
  7. Establish credit with Experian Go™
Feb 13, 2024

How can I build my credit in 24 hours? ›

Others are doable in a single day and will help your credit improve quickly:
  1. Review your credit reports.
  2. Get a handle on bill payments.
  3. Use 30% or less of your available credit.
  4. Limit requests for new credit.
  5. Pad out a thin credit file.
  6. Keep your old accounts open and deal with delinquencies.

Can you build business credit in 2 months? ›

How long does it take to build business credit? Building business credit typically takes around six months to a year of consistent financial activity, including making on-time payments to creditors and vendors, maintaining a positive bank account balance, and demonstrating responsible credit usage.

How long does it take for a small business to build credit? ›

Can You Get Business Credit Right Away? While it takes about 12 months to build solid business credit and as many as three years to build a comprehensive credit profile, you can start building at least some business credit within the first six months.

How long does business credit take to establish? ›

It can take a new business up to three years to build a strong credit score. If you're just getting started, it's important to know that companies with an established history of timely payments and responsible financial management may be able to develop their credit faster than those without any history.

What is the minimum credit score to start a business? ›

Most small business lenders like to see a business credit score above 75, but local lenders may consider lower scores for small businesses or startups. Conventional consumer financing companies rarely make loans to individuals with credit scores below 500.

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