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6 Steps to Effectively Build Business Credit

Posted by Kanika Sinha

January 19, 2024

 A roadmap to setting up a strong base for financial success.

Business credit is crucial for the financial health and success of a company. Strong business credit can help you secure funding at more favorable terms from lenders, investors, and other sources.

Further, an excellent credit score can position you to negotiate better payment terms with vendors, which will help you improve your cash flow and manage your expenses more effectively.

But a strong business credit score cannot be built overnight. It requires measured, deliberate, and consistent effort.

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Strategic planning and following the best HR practices are needed to overcome these issues.  

This article guides you through six key steps to help your small business establish business credit.


1. Register your small business

Registering your business with the Secretary of State’s office is the first step in building business credit. It involves choosing your company’s name and business structure (LLC, partnership, corporation, etc).

This move would help keep your business as a separate entity, legally distinct from you as an individual, making it easier to establish business credit.

Additionally, it sets up clear boundaries between your financial affairs and your business, thereby protecting personal assets from business debts, lawsuits, or losses.

2. Open a business bank account

Open a dedicated bank account separate from your finances for your small business. Doing so will help you authenticate your firm as a separate legal entity.

Further, your bank account will contribute to a strong business finance profile. It will serve as a bank reference on your credit applications and provide critical data to lenders during a funding review.

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3. Get a business credit card

Opt for a secured corporate credit card backed by a deposit account. These cards will give your small business a starting point to build a solid credit history. Timely payments and low credit utilization (less than 30% of your available credit) will help strengthen your business credit score.

4. Establish trade lines with suppliers

Suppliers often extend trade credit, which allows businesses to pay several days or weeks after receiving the inventory. This type of accounts-payable relationship can strengthen your business credit score.

Ensure that you set up strong trade lines with your suppliers and vendors so that your purchases and payments get reported to business credit reporting agencies.

5. Pay creditors on time

Payment history is one of the primary factors in determining your business credit score. Making timely and complete payments to creditors is an effective way for credit score improvement.

6. Monitor your business credit reports

A clean credit report is imperative for a robust business credit score. It reflects your financial integrity and can impact everything from securing loans to fostering stakeholder trust.

Regularly review your business credit reports for any inaccuracies or fraudulent activities. In case of any discrepancies, report them immediately to the credit bureaus for correction.

The final word

Establishing and growing business credit is essential to running a financially viable business. While some steps to build business credit are fast and easy, others require patience and consistent effort.

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Want to know more about finance and accounting? Since 2006, Escalon has helped thousands of startups get off the ground with our back-office solutions for accounting, bookkeeping, taxes, HR, payroll, insurance, and recruiting — and we can help yours, too. Talk to an expert today.

This material has been prepared for informational purposes only. Escalon and its affiliates are not providing tax, legal or accounting advice in this article. If you would like to engage with Escalon, please contact us here.


Kanika Sinha
Kanika Sinha

Kanika is an enthusiastic content writer who craves to push the boundaries and explore uncharted territories. With her exceptional writing skills and in-depth knowledge of business-to-business dynamics, she creates compelling narratives that help businesses achieve tangible ROI. When not hunched over the keyboard, you can find her sweating it out in the gym, or indulging in a marathon of adorable movies with her young son.

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