How to Build Business Credit

In the fast-paced business world, having a well-established credit history is essential. Strong business credit can help secure loans, build trust with suppliers and clients, and show stakeholders that your company is reliable and well-managed.

What Are the Benefits of Good Business Credit?

Good business credit demonstrates your company’s reliability and effective management. It enables you to obtain capital to grow your business, purchase inventory, hire employees, and cover day-to-day expenses. Building strong business credit can also take the pressure off your personal credit while safeguarding your personal assets.

How to Build Business Credit

Start by creating your business profile through steps such as opening a business bank account, registering your business with the state, and determining its structure (e.g., sole proprietorship, partnership, or limited liability corporation). This process provides you with an Employer Identification Number (EIN)—similar to a Social Security Number for your business—laying the groundwork for establishing credit with vendors and lenders.

Having a dedicated business bank account helps separate personal and business finances and fosters a strong relationship with your banking partner. This separation makes it easier to evaluate business performance and make informed decisions, such as when to invest in capital improvements.

Acquiring a business credit card and using it for transactions can also help build credit. It’s an easy way to manage expenses and earn rewards, but be sure to pay the balance in full each month to maintain a positive credit history.

Another effective way to build credit is by paying your bills on time—or even early. This demonstrates reliability and helps avoid costly late fees. Setting up auto-pay can be a great way to ensure payments are made promptly.

Credit Terms

To strengthen your business’s financial foundation, establish different types of credit. Many vendors offer payment terms, such as Net 30, meaning payment is due within 30 days. Others may offer Net 10, Net 20, or Net 60. Keeping payments within these agreed-upon terms ensures continued access to the supplies and inventory your business needs.

How Long Does It Take to Build Business Credit?

Building credit doesn’t happen overnight. It typically takes six to twelve months to establish a solid credit history. Making timely payments, maintaining a positive bank balance, and using credit wisely are key steps toward strong and sustainable business credit.

Deposit placement through CDARS or ICS is subject to the terms, conditions, and disclosures in applicable agreements. Although deposits are placed in increments that do not exceed the FDIC standard maximum deposit insurance amount (“SMDIA”) at any one destination bank, a depositor’s balances at the institution that places deposits may exceed the SMDIA (e.g., before settlement for deposits or after settlement for withdrawals) or be uninsured (if the placing institution is not an insured bank). The depositor must make any necessary arrangements to protect such balances consistent with applicable law and must determine whether placement through CDARS or ICS satisfies any restrictions on its deposits.