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Building a solid business credit history is essential if you plan on staying in business for a long time. Not only is it helpful when applying for a business loan, but it can also make it easier to find and work with suppliers and vendors. Building business credit can take time, though, so it’s important to start the process as quickly as possible. Here’s what you need to know. How long does it take to build business credit? There’s no hard-and-fast rule for how long it will take you to improve your business credit history. A lot of it can depend on whether you’re starting from scratch or you’re trying to get back on track after some missteps. And if you do have an established business credit history with some negative items on reports, it can also depend on how much positive history is there too. Even if you’re starting with a clean slate, it can take a while just to get a score. Dun & Bradstreet, for instance, won’t issue a PAYDEX score for your business until you have at least two tradelines with at least three credit experiences. Depending on your business’ needs, it can take months if not years to get to that point. As such, it’s important to focus more on what you can do now to improve your business credit history and address potential roadblocks in the way. Pro Tip: Take charge of your financial health today with a FREE Nav account. We'll protect and monitor your personal and business credit, so when it comes time to find financing you're prepared on all fronts. 19
How to get your business ready to build a credit history? Building business credit from scratch isn’t quite the same as it is with personal credit. It requires more than just applying for a loan or credit card and making on-time payments. Here are three steps to take to set up your business for a credit history. Separate your business from your personal life Your business typically needs to be viewed as a separate entity to start building a credit history. This may require you to incorporate the business or form a limited liability company. It’s also critical that you open a business checking account and consider getting a business credit card to make sure that your business expenses are completely separate from your personal finances. Make sure the business checking account is in your business name. Finally, get a dedicated business phone line and list it under your legal business name. Get an employer identification number If you’re a sole proprietor, you are, for all intents and purposes, your business. But you can’t build a business credit history with a Social Security number. Instead, you’ll need to get a federal employer identification number (EIN). Don’t get caught up in the name, though. You don’t have to employ other people to qualify for an EIN. It’s just a way of identifying your business as a separate entity. You can apply for an EIN online for free through the IRS website. Register with Dun & Bradstreet Dun & Bradstreet created the Data Universal Numbering System–D-U-N-S number for short–in 1962 to identify business worldwide. That number is tied to the credit profile Dun & Bradstreet builds on your business. But the company doesn’t necessarily create one for you automatically. If you’re a Nav customer, use the Business Launcher tool to see if your business already has a DUNS number. If it doesn’t, you can apply for one through the same tool. Otherwise, you can visit Dun & Bradstreet’s website to look up or apply for a DUNS number. You’ll need to provide some basic information about yourself and your business. Once you submit the application, you should receive your number within 30 days. 5 steps to improving your business credit Once your business is set up to build a credit history, what you do next is critical to ensuring that only positive information gets to the three business credit bureaus, Dun & Bradstreet, Experian, and Equifax. 1. Stay updated with the credit bureaus 2. Borrow only from lenders who report to the credit bureaus 3. Establish tradelines with your suppliers 4. Always pay on time or even early 5. Avoid the big issues The bottom lines Building business credit history doesn’t happen overnight. It takes a lot of time and effort to get where you want to be. As you build your business and want to borrow affordably establish good relationships with suppliers, having a solid business credit history is essential. 20
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