Build business credit for your small business

Learn how to build business credit for your small business using these guides.

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Business credit scores 101:Everything you need to know

By Cathie Ericson September 11, 2020

Business credit score guide

What is a business credit score?
Business credit scoring systems
Factors that affect your business credit score
Why your business credit report matters
How to build business credit

You already know a good personal credit score is key to getting the best rates on everything from credit cards to mortgages to car loans. But did you know your business credit score is just as important to the stability of your business?

If you have questions about building business credit, how to check business credit, or even your business credit score range, consider this your go-to guide to building a business credit report.

What is a business credit score

The easiest way to understand this idea is to compare it to a personal credit score.

A personal credit score usually falls between 300 and 850—with a score of 670 and up considered good or excellent. It comes from information that is reported to three nationwide consumer credit bureaus: Equifax, Experian, and TransUnion.

Each of those bureaus then creates a FICO® Score, the credit score created by Fair Isaac Corporation, which is used to make lending decisions. A FICO® score looks at your credit history. This everything from how many accounts you have, when they were opened, and how much of your credit line you’re using. The information is taken along with your history of on-time payments and the different types of credit you have. About 90% of lenders use a FICO® Score— it’s an accepted formula, and the rules are well known.

Business credit scores, however, are not as consistent. There are four companies that provide business credit ratings and the information and calculation methods they use to produce business credit score ranges vary.

Business credit scoring systems

Here are four common scoring systems that are used to check business credit and the scores they look for:

Dun & Bradstreet’s PAYDEX score:
  • Business credit score is based on payment history
  • For a higher score, you must consistently pay your bills before their due dates.
  • Higher business credit scores can earn better terms on trade credit (when vendors buy goods on credit from other vendors).
Experian Small Business Credit Share*:
  • Business credit score uses 800+ variables, including when you pay your bill each month (payment trends), public record filings, collections, and business background information.
  • For a higher business credit score, you have to pay your bills on time and maintain good debt management.

*QuickBooks uses Experian Small Business Credit Share to evaluate their customer’s business credit worthiness. QuickBooks customer account information such as profit and loss, cashflow, and personal and business credit are also considered in a QuickBooks Capital credit decision.

Equifax Business Credit Report:
  • Business credit score is based on company profile, public records, risk scores, and payment trends.
  • Equifax Business Risk scores analyze the potential risk of late payments and business failure.
  • For a higher business credit score, you must pay your bills on time and maintain a good payment trend compared to the industry norm.
FICO’s Small Business Scoring Service (SBSS):
  • Business credit score is based on both personal and business credit data, as well as payment performance.
  • For a higher business credit score, you must pay your bills on time and maintain a consistent payment trend.
  • Higher business credit scores can earn better terms for small business loans, business lines of credit, and commercial loans from the Small Business Administration.

The last one is particularly important since your FICO® SBSS also incorporates your personal credit score, creating a “hybrid score.” Since the small business owner and their business are often impossible to separate, this score has become a key factor in assessing and establishing business credit for small businesses.

Factors that affect your business credit score

Although each scoring system varies in how they calculate their business credit scores, these are the most common factors that can affect it:

  • Payment history
  • Number of years in business
  • Debt usage
  • Industry risk

The most consistently important factor is on-time payment. To maintain a high business credit score, you must be consistent in making your payments before the due dates.

Why your business credit report matters

Just as your personal credit score influences whether you will be approved for a credit card or get a great interest rate on a new loan, your business credit score impacts your ability to get funding for your company. That’s because suppliers and lenders will check business credit to:

  • See if they want to do business with your company
  • Decide whether to give you a loan
  • Determine the amount of your loan
  • Determine insurance premiums and interest rates
  • Create payment terms
  • Choose whether your account should be sent to a third-party collection agency if you are late on your loan payments, known as the “benefit of the doubt” clause.

As you can see, your business credit report can have a big effect on your small business’ success.

How to build business credit

Wondering how to establish a business credit score? The steps are similar to setting up your business and include:

Establish a business structure: If your business is a sole proprietorship (owned and run by one person), it will be more challenging to keep your business and personal finances separate and establish stand-alone business credit. Consider whether forming a limited liability company (LLC) or corporation could be the right structure for your business.

  • Register for an Employee Identification Number (EIN): This 9-digit number, like a Social Security number for businesses, is assigned by the IRS. You need an EIN to apply for a business permit, open a business bank account or credit card, and other business activities. Every company with an established EIN also has a business score.
  • Separate your business and personal finances: Opening independent business banking accounts and credit card accounts establishes you as a legitimate business and can streamline accounting and tax preparation.
  • Seek business credit: Depending on the type of business you run, having credit available can be valuable to take advantage of growth opportunities or to have a financial cushion if you run into a cash flow crunch. It also helps you manage your credit utilization, meaning how much of your available credit you are using. The ideal ratio is using less than 30% of each line of credit.
  • Get a business loan: Business loans and lines of credit are powerful tools for funding necessary expenses, such as hiring and marketing, or covering unexpected emergencies without using a high-interest credit card. They also provide an excellent source for building your business credit rating.

As you can see, your business credit report can have a big effect on your small business’ success.

How to boost your credit score fast

September 11, 2020

Your personal credit score can affect your ability to get auto loans, mortgages, and credit cards. But did you know it can also play a part in your search for business financing? Many business lenders use an applicant’s personal credit score to determine eligibility, rates, and terms—even if the funding is to be used for business.

Improving your personal credit can give you access to more financing options as well as lower rates and more flexible repayment terms. The good news is that most of the habits you use to boost your personal credit score apply to your business credit score as well. Just as you display responsible financial habits by living within your means personally, you need to do the same with your business.

There are a number of things you can do to improve your credit. Some of them, like establishing a positive repayment history, can take several months. But what if you need an immediate boost?

It’s nearly impossible to improve your credit in a day, or even over one week—but there are steps you can take to help you increase your score in weeks or months.

1. Spot and fix errors

Your personal credit report should tell the story of your financial activity, specifically as it relates to how you manage debt and credit accounts. But, sometimes errors or fraud can ruin your credit through no fault of your own. If errors and fraudulent activity make it onto your report, your credit score could suffer.

Each of the top credit reporting agencies—Experian, Equifax, and TransUnion—are required by law to give consumers a free credit report each year. To request a copy of your free credit report from all three credit reporting agencies, visit On the website you can also find information on how to call in or mail your request.

Once you get your report, review it to make sure all your information is correct and up to date. If you find errors, you can file a dispute to have them corrected. Keep in mind that each credit reporting agency collects its own information, so you’ll need to contact each individual agency to discuss errors on your reports. (Fixing an error at one credit bureau won’t fix the error at all three.)

Checking your business credit score: You are probably wondering how to check a business credit score so you can see what your potential business partners are seeing. Unfortunately checking business credit scores is not as simple as personal credit scores. That’s because unlike personal credit scores, there are no free websites to get a business credit check. Despite the fact it’s not free, it’s worth it to request a report to make sure there is no incorrect information. Checking a business credit score can range in price from $50 to $300.

2. Pay down revolving credit card debt

Revolving credit is credit that “revolves” or gets replaced as you repay it. Revolving credit accounts (credit cards) don’t close once the balance is paid in full. Instead, you have the flexibility of reusing the credit as long as the account is open.

A major factor that can directly impact your credit score as well as your business credit score is the amount of credit you have versus the amount of credit you use—specifically on revolving credit card accounts. This number is often referred to as your credit utilization and accounts for about 30% of your FICO® Score.

How revolving credit utilization works

If you have a credit card with a credit limit of $10,000 and you spend $7,000, you’re left with $3,000 in available credit on the account. If you make a $5,000 payment, your balance will drop to $2,000, leaving you with $8,000 in available credit.

You can figure out your individual card utilization by dividing your current card balance by the card limit:

Total credit card balances ÷ total credit limits = credit utilization

Credit card limit Card balance Credit utilization (%)

Total: $1,500



Credit card 1: $500



Credit card 2: $1,000



In this case, your credit utilization rate would be around 10%.

What’s the ideal credit utilization rate? There’s no single rule, but the lower the better. Some experts recommend keeping your credit utilization rate at or below 30% and others say 10% or less to get the biggest boost.

Improving your credit over time

The two steps above can result in a quick credit score boost, but only if there are no other recent negative indicators (late or missed payments, collections, charge offs, bankruptcy, etc.) in your credit report. For these types of credit problems, there are additional long-term steps you can take to continue to rebuild and improve your credit.

  • Pay on time, every time

    No secret here. Paying your bills on time every month helps to establish a positive repayment history—one of the number one factors used to determine your score. If you’ve been late or delinquent in the past, repay your debts and stay on top of your bills. The farther back those delinquencies become, the less impact they will have on your credit score and the higher your score will climb over time.

    If you’re a business, you can be certain that all agencies place premium weight on one factor—the payment history you have with suppliers, creditors, and lenders. Building a strong balance sheet to make sure that funds are collected and paid on time is pivotal to all aspects of your business, including your ability to build and maintain a high business credit score.

  • Keep hard inquiries to a minimum

    Every time you apply for credit, the creditor will run a hard credit inquiry. Each hard inquiry will lower your credit score by a few points. The more you apply, the bigger the hit. The exception here is when you’re shopping for a mortgage, auto, or student loan. The FICO scoring model allows you to shop for rates and apply with as many lenders as you want. As long as you apply within a short time frame, these will only count as one inquiry. Depending on the FICO model being used, this rate shopping window can be as short as 14 days and as long as 45 days. To be safe, do all your rate shopping in a 14-day window and you’ll avoid unnecessary hits to your score.

    Quick tip: If you’re shopping for a small business loan, applying for a loan will typically count as a hard inquiry. With QuickBooks Capital, however, we pull a soft inquiry when you apply so there’s no impact to your personal credit score. This gives you the freedom to rate shop and apply for funding without hurting your credit score.
  • Have a repair strategy

    If you checked your credit report and found accounts that either have high balances, missed payments, or are in default, you’ll need to address those issues. Create a repayment strategy that will help you make regular payments and decrease your overall debt. Your strategy should take into account your current income and bills.

    If you have both credit card debt and installment loans (mortgages, auto loans, etc.), your goal should be to manage on-time payments for each account. After that, any additional cash should go towards paying down credit card debt first. This will help lower your credit utilization and will give you more of a credit score boost than paying down installment loans.

  • Build positive payment history

    Keeping accounts open: Even if you don’t use a given card anymore, closing too many accounts limits how much credit you have available and can also hurt your score. It might be worth it to keep a credit card open—without a balance of course—and potentially even keep one recurring bill, say, your cell phone or a utility bill, on it to keep it active.

    Assuming you’ve completed the steps above and your credit is improving, you may want to consider opening a new credit card. How can a credit card improve your personal credit score?

    Opening a new credit account may help to increase your total available credit. And if you keep a low balance, this can work to lower your credit utilization rate. Plus, by using a credit card and making regular, on-time, monthly payments, you can begin to build that positive credit history.

  • A word of caution

    If you’re considering opening a credit card to improve your credit, remember that applying for a new credit card will result in a hard credit inquiry, which can temporarily bring down your credit score. Opening a new account will also shorten your average age of credit history, which accounts for 15% of the FICO® Score calculation.

    If you have bad credit, it’s likely you’ll have to deal with higher than normal interest rates, or you may even be declined altogether. In this case, it’s best to start with a secured credit card (a card that requires a deposit to open and is easier to qualify for) to work on rebuilding your credit first—at least until you improve your credit enough to qualify for better rates and terms. Finally, late payments or high balances can do more damage than good, so opening a new credit account should be a step that you take with caution.

Focusing on your business credit score

In addition to the ideas provided, there are a couple of additional strategies business owners should consider as you work towards a good business credit score.

  • Work with partners and vendors who report to business credit bureaus: You can be doing everything right, but if your good work is not being reported to the bureaus, it doesn’t matter. Verify that the vendors you work with report payments and if not, consider working with those who do.
  • Form relationships with your vendors: Managing the finances of a small business can be tricky. After all, if a client doesn’t pay you in a timely manner, you, as a result, may not be able to pay what you owe to vendors or suppliers. And while your vendors might be willing to work with you, they don’t know your situation if you don’t tell them. If you find yourself struggling with your accounts payable, let them know what’s going on with your business and make a good faith effort to pay down your bills. You may find vendors open to working out a payment plan directly with you instead of reporting the late payment to the credit reporting agencies.

Both a solid personal and business credit score is crucial for success as a small business. By focusing on how to build business credit and taking the steps for establishing personal and business credit that’s strong, you will be establishing a foundation for taking your enterprise to the next level.

What could you do with business funding?

This publication is designed to provide general information regarding the subject matter covered. It is not intended to serve as legal, tax, or other financial advice related to individual situations. For this reason, you are advised to consult with your own legal or tax professional regarding your specific situation.

**Product Information

QuickBooks Capital license: QuickBooks Capital is licensed as Intuit Financing Inc. (NMLS# 1136148). In California, loans are made or arranged by Intuit Financing Inc. (CFFL #605 4856). Intuit Financing Inc. is a licensed lender in states that require a license. Our service is limited to commercial or business loans only. State licenses include: AK #10000990, CA #6054856, DC #ML1136148, FL #CF9901279, MD #03-2339, MN #MN-RL-1136148, NM #1899, ND #MB102690, RI #20183584SL, RI #20183583LL, SD #MYL.3279, TN #166418, VT #7194 and VT #7195.