How to build business credit

You need strong credit to get business loans. Learn how business credit works and how to build yours.

A pizza delivery person financing their business

September 2023 | Published by Xero

What is business credit?

Business credit is a summary of your business's creditworthiness. Your credit file is created by credit bureaus and includes a credit score and a detailed overview of the last few years of your bill and loan payments. Lenders, suppliers, and others use this information to make informed decisions about lending money or extending lines of credit to your business. A high credit score indicates a history of successfully repaying loans and paying suppliers on time.

The three major business credit bureaus are Dun & Bradstreet, Experian, and Equifax. These companies generate your credit score based on your business's repayment of business loans, lines of credit, credit cards, and sometimes other bills. Some suppliers and utility companies will report your payments to the credit bureaus. The credit bureaus consider various elements differently, and that means your business will have a slightly different score from each credit bureau.

Benefits of having a good business credit score

A good business credit score will save you money and make it easier to get financing to grow your business. Here's an overview of how business credit works.

Cheaper financing

Lenders prefer to work with businesses with high credit scores. A high credit score shows them that you use credit responsibly. This can convince them to offer you better interest rates and more attractive credit terms, which can save you money. In contrast, if lenders think they're taking a big risk on a borrower, they'll raise the financing costs.

More access to different finance options

When your business has a high credit score, people will want to lend you money or invest with you. Good business credit can open the door to different types of financing such as angel investors or alternative online lenders.

Better terms with suppliers

When you have a low credit score or a lack of established credit, suppliers often require down-payments or deposits. A strong business credit score can help you avoid this issue. Good credit also improves your negotiating power. Just like lenders, some suppliers also give businesses better terms when they have good credit scores.

A stronger business

As you work to establish and build your business credit score, you improve your financial habits across the board. The result? A more stable business.

You can also leverage your knowledge of credit to improve your relationships with other businesses. In particular, before extending credit to clients, just check their scores to avoid bad debts.

How to build business credit for your LLC or corporation

Now you know what business credit is and how a high credit score supports your business growth. But how do you establish business credit? Well, the process may be easier than you think.

Here's an overview of the essentials for a business set up as a limited liability company (LLC) or corporation.

Get a business credit report

Look for your business's credit reports on Dun & Bradstreet, Experian, and Equifax. These bureaus may have already created credit files on your business without your knowledge. If you have an existing file, download it, check your business credit score and ask for corrections to be made if anything in the file is inaccurate.

If you don’t have an existing file with Dun & Bradstreet, you’ll need to register for a D-U-N-S Number (also called a D&B Number) to get a report from them. Experian and Equifax don’t need you to register with them.

Open a business bank account and get a business credit card

To establish credit, you need to use credit. Open a bank account and a business credit card linked to your business Employer Identification Number (EIN). Use your card and pay the bill on time or early. But don't max out your card.

Pay your bills early or on time

The key to good business credit is straightforward – just pay your bills on time. So take your accounts payable seriously. Make sure you know when bills are due and if you can’t pay on time, speak with your supplier before they report you.

Pay your bills from your business account

To make sure your business gets credit for the payments, set up all of your accounts in your business's name and pay everything out of your business account.

Keep your business accounts open

When creating your score, the credit bureaus look at how long you've had open credit accounts. A longer history is looked on more favorably. Even if you're not using a line of credit or credit card, keep it open if you can afford the related fees. That will help to boost your score.

Work with suppliers who report to the credit agencies

Unfortunately, the majority of suppliers don't automatically report to the credit agencies, but many of them will if you just ask.

How to build business credit as a sole proprietor

As a sole proprietor, you'll need to be a little more strategic when thinking about how to build business credit. In a lot of cases, lenders will want your personal information in addition to your business information. You'll need to leverage your personal credit history to get business loans. Your personal credit score is based on how you repay personal loans like your mortgage, car loans, and credit cards.

But you can also start building your business credit score using the same strategies as LLCs and corporations. Start by getting an Employer Identification Number (EIN) even if you don’t have employees – this number is used to identify your business when filing taxes and opening accounts with lenders. If applicable, register your business with your state. Open business bank accounts and credit cards linked to your EIN and get a D-U-N-S number. Use your business credit card carefully and pay it off every month. Make sure to pay all your bills on time and ask suppliers to report your payments to the credit bureaus.

Once your business credit is well established, you shouldn't have to rely on your personal credit history anymore. Just be prepared for some overlap in the beginning.

Tools to help build business credit

The right tools can help you build your business credit.

  • Use accounting software, like Xero, to automate bill payments, so you don’t forget bills or pay them late.
  • Keep an eye on cash flow. Most accounting software generates cash flow reports. These reports help you see where your cash is going. Then, you can talk to suppliers if you're not going to be able to pay on time.

How to check your business credit score

To check your credit score, or the scores of potential business clients or customers, you need to find the business on the credit bureaus’ website. This is simple – just type in the business's name and location.

In some cases, you can look at your score for free, but be prepared to spend about $50 to $100 per report. Most of the business credit bureaus offer credit monitoring subscriptions that are thousands of dollars per year – only order (and pay for) what you need.

Review your report closely, and if you see any incorrect details, write to the credit bureaus and to the entity that reported the information. Explain the mistake and ask them to update your report. To be on the safe side, check your credit at least three times per year so that mistakes or other issues don't become a problem.

Knowledge is power – when you know your credit score, you can apply for financing more confidently and create a strategy to improve your score. You can also choose your business clients or customers more carefully when you know their scores.


Xero does not provide accounting, tax, business or legal advice. This guide has been provided for information purposes only. You should consult your own professional advisors for advice directly relating to your business or before taking action in relation to any of the content provided.

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