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How Long Does it Take to Build Business Credit?


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As an FBL reader, you know that proper management of your personal credit and finances can help you reach your financial goals. But as a small business owner, you might not realize that putting the same care and effort into building up a business credit profile will set your business up for future financial success. And how long does it take to build business credit?

But when it comes to building small business credit, some of the rules are different. The tips below can help you understand them better.

How Long Does it Take to Build Business Credit?

Building business credit is the same as building your own personal credit: it takes time and consistent effort. Typically, it can take anywhere from six months to a few years to build a good credit profile for your business, and there is no real way to “fast track” it.

This timeline can vary depending on factors such as the size of your business, your industry, and how effectively you manage your credit obligations. It's important to consistently make on-time payments, keep your credit utilization low, and maintain a positive credit history to build strong business credit.

But let's back up and go over everything you'll need to know about building business credit.

Business Credit Score vs. Personal Credit Score – How are they different?

Your business credit score (also known as a commercial credit score) is similar to your personal credit score in that it determines creditworthiness for lenders.

But the way they are managed is different:

  • Business credit scores are open and available to the public.
  • Personal credit scores are private and can only be viewed with the permission of the account holder.

Who tracks the business credit score?

There are 3 major business credit reporting agencies and a handful of other agencies where you can view your report and score:

How is your business score calculated?

Unlike the personal FICO score, which ranges between 300-850, business credit scores are based on a scale of 1-100; the higher the score the lower the risk:

  • PAYDEX Score – Dun & Bradstreet – Score is 1-100. A high score indicates the greater likelihood a business will pay their debt on time.
  • Intelliscore Plus – Experian Business –  Score range is 1-100, a high score indicates the business is a lower risk. T
  • FICOⓇ LiquidCreditⓇ Small Business Scoring Service℠ (SBSS) – Score is 0-300; a higher score is better. Big banks and credit unions use this score for business loans; the Small Business Association (SBA) uses this scoring model to make decisions for their loans.

What factors determine your business credit score?

The business scoring model uses up to 5 factors to determine your score (while the personal credit FICO model uses 6 factors): 

  • Payment history
  • Utilization ratio
  • Age of credit history
  • Debt and usage
  • Industry risk
  • Company size

Now that you understand the differences between personal credit and business credit, here’s how you can go about building credit for your business.

How do I build business credit?

To build business credit, you can start by opening a business bank account and obtaining a federal employer identification number (EIN). Then, you can apply for a business credit card or a small business loan and make timely payments. Additionally, you can establish trade credit with suppliers and vendors who report to business credit bureaus. Over time, as you demonstrate responsible credit management, your business credit score will improve.

Let's take it step by step.

 #1 – Make Things Legit

By now, you should already have taken steps to start your side business; maybe you’ve grown it into a full-time gig.

Either way, it’s time to make things legit and establish your business legally:

  1. Form an LLC – Forming an LLC lets you take advantage of the benefits of both the corporation and partnership business structures. It also protects your personal and business assets and makes it easier to build business credit.
  2. Register your business name – According to the Small Business Association (SBA), your location and business structure determines how to register your business. If you’re doing business under a different name, register for a “Doing Business As” (DBA) license with your state.
  3. Sign up for an Employee Identification Number (EIN) – An EIN is a Federal Tax Identification number used by the IRS. It’s the social security number for your business.  Sign up for an EIN online
  4. Get a physical address for your business – Check out your local UPS store, they offer small businesses a real street address. Don’t use your home address.
  5. Get a separate phone number for your business – Add a separate phone line to an existing account or sign up for VoIP; Google Voice offers VoIP numbers.
  6. Open a business checking and savings account – Open this account under your business name, EIN and address, keeping it separate from your personal finances.

Don't forget the DUNS number

  1. Apply for a D-U-N-S number with Dun & Bradstreet – This step is not required, but applying for a DUNS number gets your business registered with one of the major business credit reporting bureaus. You’ll have access to your account and can make any changes as needed. Usually, this 9-digit identifier is required for any businesses that apply for an SBA loan, pursue government contracts, or offer lending/banking services.

After setting everything up, you can start building your business credit report.

#2 – Start Borrowing Under Your Business Name

Now it’s time to start borrowing under your business credit profile.

  • Apply for a business credit card that reports to one of the 3 major business credit reporting agencies. If you applied for a DUNS number, make sure the card you’re getting reports directly to D&B.
  • Open accounts with vendors that report credit agencies – You can apply for an online business account with vendors like Quill and Crown Office Supplies. They offer Net-30 accounts which is like having open credit where you can pay up to 30 days after receiving goods.
  • Apply for a small business loan – Small business loans require more planning and effort than credit cards. You’ll need established credit and a written business plan, but they are attainable. You can try online with PayPal, or search for a microlender online.

#3 – Pay Your Business Accounts Early + Monitor Credit Reports

Since payment history is a big factor in determining a business credit score, your payment history and debt usage would be making the most significant impact on your report right now.

You want to maintain good credit with vendors and card companies by paying bills early or on time, especially since some give credit for early payments.

And once you build up your credit history, monitor your credit reports. Errors can make a significant impact on your score, bringing them down and affecting your ability to get more credit.

The TL:DR – How long does it take to build business credit?

On the short end, as little as six months. On the long end – years. But building and maintaining good small business credit is just as important as taking care of your own credit score. 

There are big benefits to playing the “long game” and investing in building good business credit. With good business credit, you’ll earn better loan rates, lower interest rates, and preferable insurance rates. Plus, a better credit score can help you scale your business in the future by making it easier to qualify for larger loans.

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