Money management

Small business owner’s guide to building and using business credit

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Access to cash and credit is a small business’s lifeline. Your business’s credit rating shows lenders, suppliers, and other vendors how financially stable your business is, as well as how well you’ve been able to manage your cash and pay your business debts on time.

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Establishing a strong business credit score is the first step to helping your business get ahead, such as by making it easier to secure financing when you need it—and with the most advantageous rates and terms possible.

Whether you’re just starting out and building credit for the first time, or you’re running an established business with an existing credit history, it’s important to know how to approach the ongoing process of building business credit throughout your business’s lifecycle.

In this article, you’ll learn everything you need to know to establish, maintain, and build business credit, from getting to know your business credit score to learning how a strong credit profile will open new doors for your business.

Table of Contents

What is business credit score vs. personal credit score?

Business credit scores and personal credit scores are similar in many ways. They both measure how likely you are to repay your debts, which can influence lenders' decisions to extend credit to you (or, in the case of business credit, your business), and on what terms. When it comes to accessing loans or financing for your small business, some lenders will look at both personal and business credit scores to make a decision about a small business's creditworthiness.

What is a personal credit score?

Personal credit score is what most of us are familiar with, since it plays a large role in everyday life, whether it's applying for credit cards, securing a mortgage, financing a car, or the like. Personal credit score measures your personal payment history, credit utilization, and other key factors to determine your creditworthiness as an individual. A few things to rememember about personal credit scores is that they are connected to your social security number, range from 300-850, and can be found through reports by Equifax, Experian, and TransUnion.

What is a business credit score?

Like your personal credit score, a business credit score measures financial health and creditworthiness, with the key distinction being that the score pertains to your company as opposed to you as an individual.

46% of small businesses
use personal credit
to
run their business
Source: Mastercard

Unlike personal credit scores, business credit scores are linked to you by your employer identification number (EIN) or business tax ID number. They also typically range from 0-100. Like personal credit scores, business credit scores are reported on by three major credit bureaus, but the big three for business credit are: Experian, Equifax, Dun & Bradstreet.

You might have different goals for each score, but when all is said and done, the goal for both is the same: to establish yourself as trustworthy, and boost your value in the eyes of potential lenders.

Understanding the scale

As mentioned above, business credit scores typically range from 0–100, with zero representing a high-risk business and anything above 75 typically signaling to lenders that your business is a low-risk borrower.

Personal credit score

350 - 629
Missed payments, collections, or similar bad marks on your credit history can drag your score down into the red zone, making it harder for your to get approved for lending or credit.

630 - 689
With a fair credit score, you might get approved for loans or financing, but have to deal with less favorable terms or higher interest rates.

690 - 719
Moving your score from fair to good by adopting better habits—e.g., paying debts on time or keeping credit utilization down—can open the door to more financing and better terms.

720+
A strong track record—which often comes from a longer credit history and habits built over time—will land you with a score that affords you more financing options and some of the best terms and interest rates.

Business credit score

0 - 15
A credit score of 15 or lower could be a red flag to potential lenders, making it hard for your business to secure financing and important for you to focus on repairing your credit.

16 - 80
Depending on where you fall within this range, you’re less likely to run into barriers while seeking business financing, but your terms might change depending on your specific score.

81+
A business credit score over 80 puts your business in a great position to gain access to financing, loans, and credit with strong terms, allowing you to to invest in your business growth.

Personal credit score

Business credit score

Take your business to the next level
with a Bluevine Line of Credit

Why is business credit score important?

It’s true that your personal credit score can be an asset when you need to borrow money for your business. In fact, 46% of small business owners report using personal credit to run their business. For many, the reason behind this is that it can be tough for small businesses to build business credit and establish a proven track record in order to get approved for loans and financing. In those cases, small business owners may lean on personal loans or credit cards to cover startup and operating costs while they get established.

36% of small businesses
have been denied
loans because of
credit score
Source: Small Business Credit Survey,
Federal Reserve Banks

Here’s the issue: while it’s okay to use your personal credit to help your business get ahead, it can also be a risky move. In general, you shouldn’t lean on personal credit for business purposes except in unique circumstances. In the event that you do, it’s important to do so with an understanding of the pitfalls, which include potential damage to your personal credit score and a missed opportunity to build credit history for your business.

In addition to making sure that you’re well-versed in the risk of using personal credit for business purposes, it’s helpful to have a clear understanding of the benefits that come with separating personal and business finances, especially as you work on building your business credit. Here are a few of the reasons to keep things separate:

  • It helps streamline the process of filing your taxes.
  • It helps simplify the process of scaling up your business (hiring employees, applying for credit, etc.).
  • It can help protect you from personal liability for your business’s debts.

A strong business credit score can open doors for you and your business, such as increasing your chances of securing a business line of credit to help you grow your business. A weak score, on the other hand, can put hurdles in your path that disrupt growth, with statistics showing that 36% of small businesses have been denied loans because of their credit score. At some point, your business will need to borrow money or ask its suppliers for credit. Strong business credit and a responsible payment history will determine:

  • How much business credit a supplier will extend to you
  • What repayment terms you’ll receive
  • What interest rates you’ll pay
  • How much credit or financing a bank or lender will extend to you
  • What insurance premiums you’ll pay

For these reasons, monitoring and building your business credit score is an essential task for all business owners.

How is your business credit score calculated, and what factors impact it?

Your business credit score comes down to a variety of different factors, and the exact breakdown and weight given to each credit score requirement can come down to the individual bureau. In general, a few of the big factors that impact your score include:

  • 1

    Payment history

    A good payment history is, by far, the most important credit score requirement on your business credit report. It answers the crucial question: Does your business pay its bills on time? In fact, the weight of this factor is so strong that some credit scores are almost exclusively calculated based on payment history. Credit reporting agencies might gather information about your payment track record from banks, vendors, trade associations, or lenders that report back to credit bureaus. In addition to establishing a strong track record of on-time payments, it’s important to avoid incurring any collections referrals or liens as they can stay on your credit history for up to seven years.

    A good payment history is, by far, the most important credit score requirement on your business credit report. It answers the crucial question: Does your business pay its bills on time? In fact, the weight of this factor is so strong that some credit scores are almost exclusively calculated based on payment history. Credit reporting agencies might gather information about your payment track record from banks, vendors, trade associations, or lenders that report back to credit bureaus. In addition to establishing a strong track record of on-time payments, it’s important to avoid incurring any collections referrals or liens as they can stay on your credit history for up to seven years.

  • 2

    Company size

    The size of a business in terms of revenue is a significant contributor to your business credit score. Company size is used to determine important information like debt-to-income ratio and cash flow, which can affect your business’s ability to pay its bills on time and meet its debt service obligations.

    The size of a business in terms of revenue is a significant contributor to your business credit score. Company size is used to determine important information like debt-to-income ratio and cash flow, which can affect your business’s ability to pay its bills on time and meet its debt service obligations.

  • 3

    Age of credit history

    A good track record over a long period can really boost your credit score, since credit score largely comes down to consistency and maintaining a strong reputation over time. A business that has been around for several years or decades will naturally be in a stronger credit position than a brand new or early-stage company that doesn’t have as much history—that is, so long as the financial history of the older company is solid.

    A good track record over a long period can really boost your credit score, since credit score largely comes down to consistency and maintaining a strong reputation over time. A business that has been around for several years or decades will naturally be in a stronger credit position than a brand new or early-stage company that doesn’t have as much history—that is, so long as the financial history of the older company is solid.

  • 4

    Credit utilization

    This tells lenders how many lines of credit or loans you already have on the books, as well as how often (and heavily) you use your credit. For example, if you have a $1000 line of credit and your balance is $700, your credit utilization is 70%. If your business has high debt usage or a record of loan stacking, it’s likely to hurt your score as it can signal to potential lenders that your business’s finances aren’t particularly strong. This is especially true if you opened multiple new lines of credit in the most recent year.

    This tells lenders how many lines of credit or loans you already have on the books, as well as how often (and heavily) you use your credit. For example, if you have a $1000 line of credit and your balance is $700, your credit utilization is 70%. If your business has high debt usage or a record of loan stacking, it’s likely to hurt your score as it can signal to potential lenders that your business’s finances aren’t particularly strong. This is especially true if you opened multiple new lines of credit in the most recent year.

  • 5

    Industry risk

    Operating in a risky industry could reduce your business credit score – even if your business is otherwise sound. For example, businesses in the legal cannabis industry face legal challenges that companies in other industries do not. This can drag down an otherwise financially stable cannabis business’s credit score.

    Operating in a risky industry could reduce your business credit score – even if your business is otherwise sound. For example, businesses in the legal cannabis industry face legal challenges that companies in other industries do not. This can drag down an otherwise financially stable cannabis business’s credit score.

How long does it take to build business credit?

There are no exact rules or timelines for building strong business credit. Some experts say it can take up to three years, but that’s less-than-ideal news for the approximately 40% of small businesses that fail before reaching their third anniversary. That said, it is possible for small businesses to speed up that timeline based on their needs and business activities. For example, making sure that your business is properly incorporated can be an important step to take right off the bat.

It’s also important to have a dedicated business checking account that you’re not only using to store money, but that you’re actively using to pay business bills, make business-related purchases, and accept payments. This helps establish a clear record of your cash flow, which can make it easier for lenders to assess the financial health of your business, even without a long history.

Experts say it can
take up to
3 years to establish strong
business credit

While we’ve discussed the potential pitfalls of using personal credit to run your business, new business owners with no established business credit score do have the option of opening a business credit card with their personal credit score. Again, this isn’t an ideal solution, but it can be a way for new businesses to speed up the process of building business credit for the future.

How to check your business credit score

Just as you’d check your personal credit score by referencing reports from major credit reporting bureaus, the same applies to checking and verifying your business credit score. When it comes to your business credit score, there are three major credit reporting bureaus: Dun & Bradstreet, Experian, and Equifax. While the credit report from each bureau might provide a slightly different score depending on the weight given to different factors, each report will generally look at and provide the same information about your business.

Here’s where things aren’t quite the same as checking your personal credit score: while the Fair Credit Reporting Act (FCRA) gives you the right to free copies of your personal credit reports once a year as a consumer, the same federal law doesn’t apply to business credit reports.

72% of small business owners
don’t know where to find
their business credit score
82% of small business owners
don’t know how to
interpret their credit rating
Source: Nav American Dream Gap Survey

You may still have access to a free snapshot of your credit score—for example, Dun & Bradstreet offers free monthly business credit score insights, and Nav provides a free summary based on your collective score from all three major business credit bureaus. However, it’s important to note that these free services won’t give you the full picture when it comes to your business.

Reasons to check your business credit score

Before we talk about how to check your business credit score, it’s important to know why you should do it. Research has found that, on average, 72% of business owners don’t know their business credit scores, and of those who do know where to access that information, a whopping 82% aren’t really sure how to interpret it. Not great. Here are four reasons why it’s a good idea to check your business credit score frequently:

  • 1

    Mistakes happen

    A vendor or lender may report incorrect information, or some other business’s data can mistakenly end up on your report. If you don’t check, you won’t know.

    A vendor or lender may report incorrect information, or some other business’s data can mistakenly end up on your report. If you don’t check, you won’t know.

  • 2

    Credit scores change

    Whenever new information is reported by your lenders and vendors, your credit reports—and, by extension, your business credit score—will likely be updated to reflect the latest information.

    Whenever new information is reported by your lenders and vendors, your credit reports—and, by extension, your business credit score—will likely be updated to reflect the latest information.

  • 3

    Fraud can occur

    Business credit fraud and identity theft is a growing scourge and may result in negative information on your credit report. Monitoring your report on a regular basis could help ensure that you catch any suspicious activity early and avoid bigger problems down the road.

    Business credit fraud and identity theft is a growing scourge and may result in negative information on your credit report. Monitoring your report on a regular basis could help ensure that you catch any suspicious activity early and avoid bigger problems down the road.

  • 4

    You could get better financing

    Business owners who understood their business credit are 41% more likely to be approved for financing, according to data from Nav. Unlike with personal credit reports, anyone can buy a copy of your business credit report at any time—with or without your knowledge or permission—in order to evaluate how risky it is to work with you. Diligently staying on top of your score can guarantee that you’re aware of the picture that prospective lenders and partners are getting when they look into your business.

    Business owners who understood their business credit are 41% more likely to be approved for financing, according to data from Nav. Unlike with personal credit reports, anyone can buy a copy of your business credit report at any time—with or without your knowledge or permission—in order to evaluate how risky it is to work with you. Diligently staying on top of your score can guarantee that you’re aware of the picture that prospective lenders and partners are getting when they look into your business.

What you’ll see when you check your business credit report

Each ratings agency has its own process for collecting and verifying data, but the main sections are pretty similar. Here’s a list of the things you’ll typically find as you review your business credit report:

  • 1

    Business profile

    The first thing on your credit report will be a section that gives a snapshot of your business, including your business name, address, status of incorporation, years in operation, sales, and size.

    The first thing on your credit report will be a section that gives a snapshot of your business, including your business name, address, status of incorporation, years in operation, sales, and size.

  • 2

    Business credit score

    Each business credit report will provide your business credit score, along with a brief description of how to interpret that score and the different factors that are impacting it.

    Each business credit report will provide your business credit score, along with a brief description of how to interpret that score and the different factors that are impacting it.

  • 3

    Risk rating

    Your report will include a risk score between 1–5 (one indicating the lowest risk; five indicating the highest) to signal the financial stability and creditworthiness of your business.

    Your report will include a risk score between 1–5 (one indicating the lowest risk; five indicating the highest) to signal the financial stability and creditworthiness of your business.

  • 4

    Credit summary

    This section of your credit report will highlight details about your credit history and performance, including credit line, days beyond terms (DBT), balance history, bankruptcies, and payment trends..

    This section of your credit report will highlight details about your credit history and performance, including credit line, days beyond terms (DBT), balance history, bankruptcies, and payment trends..

  • 5

    Payment history

    This section offers information about your business’s last several years of payment history, showing payments to vendors in addition to lenders and highlighting payment trends, such as continuous on-time payments.

    This section offers information about your business’s last several years of payment history, showing payments to vendors in addition to lenders and highlighting payment trends, such as continuous on-time payments.

  • 6

    Legal filings, collections, and liens

    While you’ll get a snapshot of this information in your credit summary (see #4), this section of your credit report will break it all down further, giving you more specifics around any negative marks on your score that could serve as a red flag to prospective lenders.

    While you’ll get a snapshot of this information in your credit summary (see #4), this section of your credit report will break it all down further, giving you more specifics around any negative marks on your score that could serve as a red flag to prospective lenders.

Common mistakes that can hurt your business credit score

Understanding how to build strong business credit is just one piece of the puzzle; making sure you have the right tools to continuously protect a strong credit score and avoid throwing your business off track is the other.

Here are seven common mistakes that can negatively impact your business credit, whether you’re just starting out or have been in business for some time:

  • 1

    Maxing out your business credit card

    Many lenders prefer to lend to businesses that keep their utilization rate under 30%. This means that if you’re constantly maxing out your business credit card, this could negatively impact your overall business credit score. The good news is that, even if you’re regularly using your credit, you can ask your lender when they issue reports to credit bureaus and simply make sure to pay down your balance before the end of the reporting cycle every month. This will help ensure that credit utilization doesn’t ding your score.

    Many lenders prefer to lend to businesses that keep their utilization rate under 30%. This means that if you’re constantly maxing out your business credit card, this could negatively impact your overall business credit score. The good news is that, even if you’re regularly using your credit, you can ask your lender when they issue reports to credit bureaus and simply make sure to pay down your balance before the end of the reporting cycle every month. This will help ensure that credit utilization doesn’t ding your score.

  • 2

    Missing loan payments

    Missed or late payments are a red flag to lenders and signal that your business is at higher risk of defaulting on a loan. For this reason, failing to make on-time payments on business loans—even just once or twice—could cause your score to drop.

    Missed or late payments are a red flag to lenders and signal that your business is at higher risk of defaulting on a loan. For this reason, failing to make on-time payments on business loans—even just once or twice—could cause your score to drop.

  • 3

    Ignoring errors on your business credit report

    Again, mistakes happen, so taking for granted that the information on your credit report is accurate could ultimately hurt your score. It’s important to regularly review your business credit reports for errors and, if you spot any, to follow the appropriate dispute resolution process to request a correction.

    Again, mistakes happen, so taking for granted that the information on your credit report is accurate could ultimately hurt your score. It’s important to regularly review your business credit reports for errors and, if you spot any, to follow the appropriate dispute resolution process to request a correction.

  • 4

    Applying for new credit too often

    Applying for multiple new business credit cards or loans within a short period may signal to the credit rating agencies that you’re in a financial pinch, and they’ll see you as a higher-risk borrower. This will ultimately hurt your score and your chances of accessing credit in the future.

    Applying for multiple new business credit cards or loans within a short period may signal to the credit rating agencies that you’re in a financial pinch, and they’ll see you as a higher-risk borrower. This will ultimately hurt your score and your chances of accessing credit in the future.

  • 5

    Not using business credit at all

    Responsibly using credit can be an important part of building credit. Even if you don’t need credit or financing right this minute, it’s still a good idea to establish a business credit history. Federal agencies, state/local agencies, and many larger companies tend to screen potential partners and vendors by checking their business credit. So if you want to be eligible for these potentially valuable contracts, it’s essential that you build and maintain a good business credit track record.

    Responsibly using credit can be an important part of building credit. Even if you don’t need credit or financing right this minute, it’s still a good idea to establish a business credit history. Federal agencies, state/local agencies, and many larger companies tend to screen potential partners and vendors by checking their business credit. So if you want to be eligible for these potentially valuable contracts, it’s essential that you build and maintain a good business credit track record.

  • 6

    Exposing your business to fraud

    Criminals can steal sensitive business information, like your business’s tax identification number, and use it to open credit lines or get business loans in your business’s name. Keep sensitive company information safe, such as by keeping an eye out for phishing scams, and monitor your business credit regularly.

    Criminals can steal sensitive business information, like your business’s tax identification number, and use it to open credit lines or get business loans in your business’s name. Keep sensitive company information safe, such as by keeping an eye out for phishing scams, and monitor your business credit regularly.

  • 7

    Working with vendors that don’t report positive activity to credit bureaus

    Many vendors don’t report to the business credit rating agencies at all, so your history of on-time payments could be going unnoticed where it matters most. To make sure your payment history counts, open a vendor account or line of credit with a company that reports to one of the three business credit bureaus: Dun & Bradstreet, Experian, or Equifax.

    Many vendors don’t report to the business credit rating agencies at all, so your history of on-time payments could be going unnoticed where it matters most. To make sure your payment history counts, open a vendor account or line of credit with a company that reports to one of the three business credit bureaus: Dun & Bradstreet, Experian, or Equifax.

How to improve your business credit score

Once you are aware of what information is important to the business credit rating agencies, you can take the steps necessary to positively impact your score. Of course, the best way to achieve a strong business credit score is starting off on the right foot and building that score over time. That said, if your business credit score is less than optimal, all is not lost. Improving your business credit is possible, but it could take time.

Keep in mind that, like your personal credit score, negative marks on your business credit report should naturally fall off your report within seven years. However, bigger derogatory marks—like a bankruptcy—can take up to 20 years to fall off your report.

Tips to get your score back on track

Keep your debt and credit utilization ratio low.

Make timely payments on recurring business bills and accounts.

Get your personal credit in order, since some lenders look at both credit scores.

Stay on top of legal matters, including taxes, licenses, insurance policies, etc.

Regularly check for errors on your credit report to avoid any inaccuracies.

Avoid activities that could look risky to lenders, such as closing business-related accounts.

Common questions about building and maintaining a strong business credit score

Building business credit isn’t easy, and keeping your business credit score healthy over time takes work. That said, strong business credit is essential to building a thriving business that grows over time.

As you navigate the journey of building business credit, here are additional common questions that might come up along the way:

siness line of credit, there are some benefits to doing so. For example, applying with an EIN (instead of a social security number) can keep your personal and business finances separate.

If you spot an error, report it to the credit agency that reported it to file a dispute. All three of the major business credit reporting agencies—Dun & Bradstreet, Experian and Equifax—have processes in place  to help you check your scores and address inaccuracies. Simply look into the steps required by your credit bureau to get things straightened out.

Absolutely. But be prepared: lenders are often wary of sole proprietorships. That’s because, legally speaking, only one person is accountable for the success or failure of your business. You may be savvy, talented, and industrious, but one misstep or stroke of bad luck—like an accident or an illness—could take you out of the game. This can leave your debts unpaid with nobody else to pick up the slack.


Here are a few ways you can help build business credit as the sole proprietor of a small business:

  • Avoid using personal credit cards. Many sole proprietors of small businesses use personal credit cards in the beginning. But doing so makes you personally liable for those debts. Plus, it can put your personal credit score in jeopardy and keep you from building business a business credit history.
  • Take out a business credit card. This is a pretty simple and accessible way to build your business credit score since you only have to make your payments on time and maintain a low (or no) balance.
  • Incorporate your business. Forming a corporate entity—like an S or C Corporation or a Limited Liability Company (LLC)—helps erect a legal and financial safeguard between your personal life and the life of your business. Having a distinct corporate identity will also help you set yourself up to establish an independent business credit history.

It could, and what’s more, it could potentially affect both your business and your personal credit score. Still, there are many reasons you might prefer to close a business credit card, such as high fees or a lack of rewards. The good news is that dings to your credit score due to an account closure may not have a lasting impact, and your score can bounce back within a few months, assuming you continue keeping all other accounts in good standing.

The Consumer Financial Protection Bureau suggests checking your personal credit report once a year, at a minimum. For business credit, some experts recommend a cadence of once a month. Remember, each time new information is reported by your lenders and vendors, your credit reports—and scores—may change. So you should keep a sharp eye on your report, and review it frequently.

How a Bluevine Line
of Credit can help you
grow your business

One of the biggest benefits of building a strong credit profile for your business is that it opens plenty of doors when it comes to financing—including accessing a business line of credit.

At Bluevine, the Line of Credit gives small business owners the benefit of flexible working capital that can support both short- and long-term growth goals. Here are just a few of the ways that you can use a Bluevine Line of Credit to improve performance and build a brighter future for your business:

Optimize your website, improve your organic discoverability, and invest in efforts to improve your overall online presence.

Repair, replace, or upgrade existing equipment in order to better position yourself for larger jobs or new opportunities.

Invest in specialized tech and software solutions to optimize business operations and streamline everyday tasks associated with running your business.

Create new revenue streams by investing in the development of an online course, a new product, an e-book, etc.

Stock up on inventory at key moments in your business cycle in order to ensure that you’re ready to meet increased customer demand during busier seasons.

How to apply for a Bluevine Line of Credit

Ready to take the next step forward by investing in your business growth with a Bluevine Line of Credit? Read on to learn more about how to apply:

Step 1
Provide your business information.

First things first, we’ll need to gather information about your business. There are a few things you’ll need to have ready to complete this section, including: business name, business address, tax ID/EIN, annual revenue, and any information about existing financing.

Step 2
Connect your business bank account.

Connecting your business bank account allows us to process your application as quickly and easily as possible. We use Plaid to facilitate secure external bank connections. Plaid is a tool that lets you securely connect your bank account to your favorite financial services like Bluevine.BVSUP-00054 We also never store or have access to your login credentials.

Step 3
Provide your personal information.

Part of Bluevine’s application process for a Line of Credit is a soft check on your personal credit. (Don’t worry—this won’t impact your personal credit score.BVSUP-00008) At this part of the application, the information we’ll need includes: your full legal name, address, phone number, date of birth, social security number, percentage of business ownership, and information about any beneficial owners of your business.

Step 4
Review your application and submit.

Once you’ve completed the first three steps—a process which can take just minutesBVSUP-00006—give your application one last look to confirm that everything is correct and then you’re ready to submit. You’ll receive an email confirming that your application has been submitted successfully, after which we’ll work on verifying your information. As we review everything, you’ll receive updates via email about your application’s status or additional information we’ll need to finish processing your application.

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