Business owners/upcoming entrepreneurs

Business Credit: What It Is and Why It Matters More Than You Think

When most people think about credit, they think of personal credit scores, credit cards, and loans. But if you own a business or plan to start one business credit is just as important, if not more. It can determine your ability to secure funding, negotiate better terms with suppliers, and even protect your personal finances. Yet, many entrepreneurs don’t fully understand how business credit works or how to build it. Let’s change that.

What Is Business Credit?

Business credit is a financial profile tied to your business, separate from your personal credit. It works similarly to personal credit lenders, vendors, and financial institutions use it to assess how risky it is to do business with you.

A strong business credit profile can:

Help you qualify for business loans and credit lines

Allow you to lease equipment or office space without a personal guarantee

Secure better terms with suppliers (e.g., net-30 or net-60 payment terms)

Protect your personal credit by keeping business expenses separate

How Business Credit Is Built

Building business credit doesn’t happen overnight, but here’s how to start:

1. Establish Your Business as a Separate Entity

If you’re operating as a sole proprietor under your personal name, it’s time to make your business official. Registering as an LLC or corporation separates your personal and business finances, which is key for building business credit.

2. Get an EIN (Employer Identification Number)

An EIN is like a Social Security number for your business. You’ll need it to open a business bank account, apply for credit, and establish your business with the IRS. You can get one for free from the IRS website.

3. Open a Business Bank Account

Lenders and vendors want to see that your business is financially stable. Keeping your business transactions separate from personal ones not only helps with bookkeeping but also establishes legitimacy when applying for credit.

4. Apply for a Business Credit Card

A business credit card is one of the easiest ways to start building credit. Use it wisely, keep your balances low, and always pay on time. Some great starter options include secured business credit cards or those designed for businesses with limited credit history. (Make sure to checkout my ebooks at the top of the page for further tips and tricks dealing with credit cards)

5. Work with Vendors That Report to Business Credit Bureaus

Not all vendors report to business credit agencies like Dun & Bradstreet, Experian Business, and Equifax Business. If possible, establish accounts with suppliers that do. Paying invoices on time (or early) will strengthen your business credit profile.

6. Monitor Your Business Credit Report

Just like personal credit, business credit reports can have errors. Regularly check your credit profile with major business credit bureaus to ensure everything is accurate and dispute any discrepancies.

Business Credit vs. Personal Credit: Why It Matters

Many small business owners rely on their personal credit when starting out, but that can be risky. Here’s how business credit compares:

Personal Credit	Business Credit
Tied to your SSN	Tied to your EIN
Affects personal financial health	Separates business & personal finances
Used for personal loans & credit	Used for business loans, leases & trade credit
Can be damaged by business debt	Protects personal credit from business risks

By establishing strong business credit, you reduce personal liability and open doors for better financial opportunities.

Final Thoughts

Whether you’re just starting out or already running a business, building business credit should be a priority. It’s one of the best ways to secure funding, grow your company, and keep your personal finances intact.

Take the time to establish your business properly, use credit responsibly, and work with vendors that report payments. Over time, you’ll build a solid business credit profile that can help take your company to the next level.

I would love to hear feedback of any sort. Have you started your business yet? Do you know what cards will get you the guaranteed best rates? Make sure to book a consultation with me!