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7 Steps to Business Credit

When getting credit in this market, it’s important to bring at least one of the three legs of credit to the table. The three legs are Personal Credit Profile of applicant, Assets of the business, and Revenues of the business. In the middle of the three legs of credit is your business credit profile.
We’re going to show you how to build up your business credit profile, then you’ll want to bring at least one of the three legs of credit with you when meeting with your local Branch Manager. Note that not all branch managers of local banks are created equal. Seek to find someone who
has been at the bank for a long time, seen a lot of approvals recently and doesn’t mind preparing you to help you get approved. There are some branch managers that simply tell you to apply and “see what happens”, this is not the ideal banker to work with. So, how do you prepare your company to get business credit?


We have broken the process down to 7 Steps:

  1. Form your Business
  2. Make your Company “Business Credit Ready”
  3. Network with Local Banks and Credit Unions
  4. Setup Business Credit Profiles with the three Bureaus
  5. Build Small Trade Lines of Credit
  6. Optimize your Business Credit Rankings
  7. Get Business Credit Financing!

1. Forming your Business
You need to create a company (entity) that is separate from you personally. Create either an Limited Liability Company (LLC) or Corporation (S-Corp or C-Corp). The exact type of entity you
choose is up to you and your business attorney and/or tax qualified professional (in fact, we recommend you seek such when building business credit). Any one of the three types of entities
will work. Just make sure you get your EIN Number from the IRS after creating the company. When creating the Business, try to create a neutral name. An example would be something like
“Legacy Management, LLC” instead of “Legacy Real Estate, LLC”. With the former, you have a company name that is neutral. This makes it easier when your application goes through the underwriting process. A lot of banks shy away from certain industries (including real estate). The solution is to avoid any negative connotations with the name of your company. Additionally, consider having your primary line of business be neutral as well. Following our example, you could register your company as a Business Services Company (or Business
Management Company) rather than a Real Estate Company.

2. Making your Company “Business Credit Ready” Now that your company is setup, the next step is to prepare the company to be “brought to the market”. When bringing your company to business credit lenders (“the market”), you want to complete a few compliance matters to avoid getting declined for trivial reasons. For example, make sure your company has a landline that is dedicated for business use (not a cell phone, but a landline). You want to make sure the phone number you get is local to the area you are doing business in. Then, make sure you list the phone number with the yellow pages and 411 directory. Secondly, create a basic online presence for your company. Ideally, purchase the .com for your company name (I.E. – mycompany.com). Also, create an email account for the business. It’s much more professional this way and many lenders require such. Lastly, have your paperwork in order. Prepare your articles/certificate of formation, EIN Letter from the IRS and an operating agreement for the company. These documents will be frequently needed when meeting with bankers and setting up your company to get business credit. If you can also create a business plan, this is helpful, but not required.

Sign Up For NET 30 AccountSign Up For NET 30 Account
  1. Network with Local Banks
    Local banks have the money to lend. We spoke about this earlier. Many local banks and credit unions offer small business lending products that cater specifically to companies like yours. So
    start networking with local, community banks in your area. If the bank only has one or two branches, then this is usually the bank you want to build a relationship with (assuming they offer
    business products like business checking accounts, credit cards, loans/lines of credit). Clarify with the bank their “lending mood”. Some banks are very conservative right now and some
    banks are eager to lend to small businesses.
  1. Setup your Business Credit Profiles D&B is a major bureau that monitors and tracks business credit profiles. They are similar to
    Experian, Equifax and Transunion in the “personal credit profile world”, except they specifically monitor businesses credit profiles.
    Visit Dun and Bradstreet at https://iupdate.dnb.com or give them a call to request a DUNS Number. A DUNS Number is a 9 digit “business social security number” assigned by D&B. They offer different packages from their free DUNS Number to hundreds of dollars. At the end of the day, pick any package that works for you. I usually just get the free version . I have never had issue getting business credit with their free DUNS Number. For the other two bureaus that we focus on, Experian Small Business and Equifax Small Business, a profile will be created with them later, as a result of getting trade lines.
  1. Build Trade Lines of Credit You have a business created, tax ID number, address, phone number, online presence and a
    DUNS Number. Now it’s time to get some credit that will report to the business credit bureaus(I.E. – Dun and Bradstreet). This process will beef up your business credit score and start to put your company on the map.What you need to do it reach out to companies that you do business with (paper/office supply companies, gas stations, computer/technology companies and other stores) and see if they can
    offer your business credit terms. In the beginning, you will want to start small (amounts as low as $10, some as high as $2,000) and ask to be billed on NET30 terms. This means if you buy
    paper supplies from a company like Quill, for example, you will receive the product in a few days, and you’ll need to pay for it, in full, within 30 days. Essentially, you just bought something
    on short-term credit in your company name. And as of this writing, Quill reports positive payment history to the business credit bureaus.
  1. Optimize your Business Credit Rankings After purchasing products on NET30 terms, you will start to get some positive credit history
    reporting for your business. Make it a goal to establish at least 5 trade lines of credit to boost your business credit profile(s). After hitting this mark, your business credit profile will start to get
    ranked within a system called PAYDEX. Getting a PAYDEX Score high enough that banks and lenders are willing to lend to you is the goal. PAYDEX scores range from 0 – 100, so aim to
    have an 80 or higher. Also, start getting store cards and gas cards to optimize and create profiles with Experian Small
    Business and Equifax Small Business. One of my favorite cards to get is the Commercial Account or Commercial Revolving account with Home Depot for Business. Go into a local store
    and get an account with them. Read the terms and conditions and fine print to get an idea of the requirements. Upon approval and after you use the card, Home Depot will report to all three
    business credit bureaus your payment experience!
  1. Get Business Credit! At this stage you are ready to get business credit. True business credit will not show on your personal credit report. There are a few banks (very small percentage) that still report payment experiences to your personal credit profile and your business credit profile. Try to stay away from these lenders. Depending on what leg of credit you bring to the table would determine what type of business credit you may qualify for. In the beginning, apply for small business credit cards if you want a no-doc, unsecured line of credit.
    Based on your needs, you can apply for SBA Loans, Business Loans and Business Lines of Credit.

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