How to Build Business Credit Quickly: 6 Simple Steps

You’ve just launched your dream business. You’re buzzing with excitement, ready to conquer the market.

But now, you need funding to grow, manage cash flow, and handle unexpected expenses. Your personal credit card isn’t cutting it, and lenders aren’t taking you seriously. 

What now?

This is where building business credit becomes crucial. Many new business owners face this challenge. 

Without business credit, your growth is stunted. You can’t secure loans, get favorable terms from suppliers, or even manage day-to-day expenses efficiently. But don’t worry – building business credit is not as daunting as it seems. 

With a few strategic steps, you can quickly establish strong business credit and open doors to better financial opportunities.

Here’s our comprehensive guide for you to help you understand and build business credit quickly.

Why Business Credit Matters

When you establish business credit, your company becomes a separate entity from you as an individual.

This separation is vital for protecting your personal assets and providing a professional image to lenders and suppliers. 

Here’s how business credit can help your company:

✅ Access Funding: Obtain loans and lines of credit with favorable terms.

✅ Improve Cash Flow: Manage business expenses and cash flow more effectively.

✅ Separate Finances: Keep your personal and business finances distinct, simplifying accounting and tax filing.

✅ Enhance Credibility: Show suppliers and lenders that your business is financially responsible and trustworthy.

Now, let’s dive into the six simple steps to build your business credit quickly.

Step 1: Choose the Right Business Structure

To establish business credit, your company must be recognized as a separate legal entity. This requires choosing the right business structure. 

We’ll give you an overview of different types of business structures 👇

Types of Business Structures:

✔️ Limited Liability Company (LLC): Offers personal liability protection and flexible tax options.

✔️ Limited Liability Partnership (LLP): Provides liability protection for each partner while allowing shared management.

✔️ Corporation (C-Corp or S-Corp): Offers strong personal liability protection, distinct legal entity status, and potential tax benefits.

Keep this in mind while deciding your business structure: Sole proprietorships do not create a separate business entity, meaning your personal and business finances are intertwined. To start building business credit, avoid sole proprietorships and opt for an LLC, LLP, or corporation.

And what’s the next thing to do after deciding your business structure?

You’ll have to register your business with the appropriate state authority. 

This step varies depending on your location and structure but is essential for establishing your company as a separate legal entity. For additional support, check out doola’s business registration guide. 

Step 2: Obtain a Federal Tax ID Number (EIN)

An Employer Identification Number (EIN) is a nine-digit number assigned by the IRS. It serves as your business’s federal tax ID, similar to a Social Security number for individuals. 

You’ll Use Your EIN For:

✅ Filing company tax returns

✅ Opening a business bank account

✅ Applying for licenses and permits

✅ Applying for business credit

How Do You Apply for an EIN?

It’s free and easy. Just use the IRS assistance tool and you’re good to go.

Or, you can get in touch with us. EIN registration is included in all of our business formation packages and can get you set up quickly and effortlessly.

Step 3: Open a Business Bank Account

With your EIN in hand, it’s time to open a business bank account. This keeps your personal and business finances separate and shows lenders you’re legit.

Benefits of a Business Bank Account:

✔️ Clear Separation: Simplifies your accounting and tax filing.

✔️ Bank Reference: Helps with credit applications.

✔️ Lender Data: Provides key financial data for loan reviews.

Pro Tip: Get to know your bankers. They can offer advice and might be more likely to help when you need credit or a loan.

Step 4: Establish Credit with Vendors and Suppliers Who Report

One of the easiest ways to build business credit is through vendors and suppliers. Apply for net terms, pay on time, and make sure they report to credit agencies. 

Now, you can begin with smaller credit limits and build up. This shows you’re reliable without stretching your finances too thin.

How to Establish Vendor Credit:

✔️ Apply for Net Terms: Pay for purchases within a set period after receiving the invoice.

✔️ Timely Payments: Always pay your invoices on time or early.

✔️ Reporting Vendors: Choose vendors that report your payment history to credit agencies.

Example of Vendors:

👉 Office supply stores

👉 Wholesale suppliers

👉 Marketing agencies

Step 5: Monitor Your Business Credit Reports

Keeping an eye on your business credit reports is essential for maintaining a healthy credit profile and catching any issues before they become major problems.

So, make it a habit to check your business credit reports at least quarterly. 

Head over to the websites of Dun & Bradstreet, Experian Business, and Equifax Business.

These are your go-to places for accessing your reports. Once you’re there, review your credit score, payment history, and any new credit accounts or inquiries that have popped up. 

You can also sign up for a business credit monitoring service to get alerts about changes to your reports.

This proactive approach can help you address issues quickly and maintain a strong credit profile.

Why Monitoring Matters:

Regular monitoring of your business credit reports helps you:

✔️ Ensure Accuracy: Verify that all the information reported about your business is correct.

✔️ Catch Errors Early: Identify and dispute any mistakes or inaccuracies that could hurt your credit score.

✔️ Detect Fraud: Spot any signs of identity theft or fraudulent activity quickly.

✔️ Stay Informed: Keep track of your credit score and how it changes over time.

Keep this in mind: Sometimes, you’ll spot an error in your reports.

Maybe there’s an incorrect payment history or an account that doesn’t belong to your business.

Each credit bureau has a process for disputing these errors, and you can usually submit disputes online, by mail, or over the phone. 

Once you’ve submitted a dispute, don’t just sit back and wait. Follow up to make sure the error gets corrected. It might take a few weeks, but it’s worth it to keep your credit profile spotless.

Step 6: Boost Your Credit Building Score with Nav

So you’ve set up your business, opened a bank account, snagged a new business credit card, and established healthy trade lines. You’re doing all the right things to build your business credit.

But what if there was a way to make this whole process easier and more efficient?

That’s where Nav Prime™ by Nav comes in. This tool can be your go-to tool for all things business credit. We’re not exaggerating, and you’ll see why.

Here’s how Nav Prime works its magic:

Monitor Your Credit Like a Hawk

Nav Prime™ allows you to keep a close watch on both your personal and business credit scores.

It provides detailed reports from major agencies like Equifax® and Experian™ for business credit, and Experian™ and TransUnion® for personal credit. This means you always know where you stand financially.

Unlock Powerful Financial Insights

Ever wonder what’s really affecting your credit scores? Nav Prime™ breaks it down for you. You’ll get to see aggregated financial trends, dips, and key market factors, giving you a clear understanding of your financial health.

Stay Alert with Real-Time Notifications

Nav Prime™ gives you real-time alerts for any changes in your credit status. You’ll know exactly what’s happening and when it’s happening so you can take proactive action.

Manage Everything in One Dashboard

Juggling multiple credit reports can be a headache. This tool consolidates all your credit information into a single, easy-to-navigate dashboard. You can view both your business and personal credit info in one place, without changing tabs.

Gain Insights from Public Records 

Public records can be extremely valuable because they provide important details like UCC filings that can affect your business. Nav Prime™ gives you access to these records, helping you understand and manage factors that impact your credit.

See What Lenders See

Understand exactly what lenders report about your business. This transparency helps you shape up your credit profile to look more appealing to lenders.

Solve Problems Before They Start

With real-time alerts and detailed public records, you can address potential issues before they become roadblocks.

Your Business Credit Journey Starts Here

We get it. Building business credit isn’t an overnight process. It’s a journey with its fair share of ups and downs. Setting up your business, getting on the radar of vendors, raising funding – it all takes time.

But here’s the thing: with the right approach, you can tackle these challenges head-on and come out on top. Remember, establishing business credit is all about laying down a strong foundation.

Choose the right business structure, get your EIN, open that business bank account, and start building relationships with vendors who report to credit agencies. Monitor your credit regularly and keep your financial records clean and up-to-date.

Each step is crucial and sets you up for long-term success.

Most importantly, don’t let obstacles sit in the back seat. Address them as they come.

If things get too complex or confusing, don’t hesitate to bring in financial experts like doola and Nav to simplify the entire process. We’ve got the tools, expertise, and support to help you navigate the financial maze.

In the end, building business credit is about patience, persistence, and smart strategies. 

So stay proactive, keep learning, and remember that every step you take is a step closer to a stronger, more credible business. 

How doola Can Help

Here’s what we can do for you:

Getting Your Business Structure Right

No more wrestling with paperwork and operating agreements. Whether you need an LLC, LLP, or corporation, we’ll handle it all. Having the right structure separates your personal and business finances and sets a solid foundation for building credit.

EIN and Compliance Made Easy

We make getting your Employer Identification Number (EIN) a walk in the park. Plus, we keep you on track with all the compliance requirements, so you never have to worry about missing a filing or deadline.

Setting Up a Business Bank Account

With doola, you get guided support to set up a business bank account that separates your personal and business finances.

So, jump in and let doola help you achieve your credit-building goals. Book a free consultation now.