How to Build Business Credit

Beginner: Business Credit, Explained

What business credit is

Business credit is a record of how your company borrows and pays, tracked in the business name rather than yours. Lenders and vendors use it to decide whether to extend credit to the business.

Just like personal credit, it is built by borrowing and paying on time. The difference is whose name and file it lives under.

Why keep it separate from personal

When the business has its own credit, you protect your personal score and limit your personal risk. The business can qualify for financing on its own record.

Blur the two together and a business problem becomes a personal problem, and vice versa. Separation is the whole reason to do this work. The What's My Credit Good For tool at /credit can help you see your starting point.

The foundation that has to come first

Before any business credit can report, the business has to exist properly. That usually means a legal structure, an EIN from the IRS, a business bank account, and consistent business details everywhere.

Many businesses also get a business identifier used by credit bureaus. Without this foundation, accounts have nowhere to report and no file to build.