How To Build Business Credit For a New LLC

Introduction.

Starting a new business is exciting, but it comes with a lot of challenges. One of the most important tasks you’ll need to take care of early on is building business credit. It can sometimes feel like an overwhelming process, especially if you’re just getting started with your LLC.

But here’s the good news: it doesn’t have to be complicated. Getting your business credit in shape is something you can handle, and the benefits that come with it are worth the effort.

Business credit is crucial for any business—big or small. It can help you secure loans, get better financing terms, and even save money on insurance.

If you don’t have business credit yet, you might be relying on your credit to fund your business, which can be risky. Building separate business credit helps keep things clear, protects your assets, and sets you up for future growth.

In this post, I’ll walk you through the steps you need to take to build business credit for your LLC.

By the end, you’ll know exactly how to build your business credit and set your LLC up for success.

How Do I Build a Business Credit For a New LLC?

1. Register Your LLC

Before you can start building business credit, your LLC needs to be set up properly. That means you need to get the right paperwork filed with the state.

Depending on where you are, this might include registering with your state’s business registry, getting an Employer Identification Number (EIN) from the IRS, and setting up your business as a legal entity.

Having an official LLC gives your business legitimacy, and it helps you keep your personal and business finances separate.

You’ll need this separation to build business credit. If you haven’t already, make sure to file the necessary documents for your LLC and make sure all your paperwork is in order.

This step also includes choosing the right business name, so take some time to think that through!

2. Get an Employer Identification Number (EIN)

An EIN is like a social security number for your business. It’s a unique identifier that you’ll use when filing taxes, opening business bank accounts, and applying for business credit. Even if you don’t have employees, you’ll still need an EIN to start building your credit.

Getting an EIN is quick and free—just head to the IRS website and apply online. Once you have it, you’ll be able to set up business accounts and start working on your credit profile.

3. Open a Business Bank Account

Once your LLC is officially registered, it’s time to open a business bank account. This is another essential step because it helps you separate your business and personal finances.

It also makes it easier to track your business’s income and expenses, which will be helpful later when applying for credit.

When choosing a business bank account, look for one that fits your needs. Some accounts offer low fees or special features for small businesses.

This is where you’ll deposit your business income, pay bills, and keep your business funds safe. Having a dedicated business account also shows lenders and vendors that you are serious about building your business.

4. Establish a Business Credit Profile

Now that your LLC is officially registered and you have an EIN, you can start building your business credit profile.

The main credit reporting agencies for businesses are Dun & Bradstreet, Equifax, and Experian. To get started with Dun & Bradstreet, you’ll need to apply for a D-U-N-S number, which is a unique identifier used to track your business credit.

Getting listed with these agencies allows potential lenders and vendors to see your business’s creditworthiness.

It’s important to check your credit report periodically to make sure everything looks accurate and up-to-date.

5. Set Up Trade Lines with Suppliers and Vendors

One of the easiest ways to build business credit is by establishing trade lines with suppliers and vendors.

These are companies that extend credit to your business, allowing you to purchase goods or services on credit and pay them back over time.

When you establish these trade accounts, the vendors will report your payment history to the credit bureaus.

Look for vendors that report to the major credit agencies, and start small with manageable purchases.

Over time, as you make timely payments, your business credit score will improve.

A few examples of companies that might offer trade credit include office supply stores, manufacturers, or even service providers like utility companies.

6. Apply for a Business Credit Card

Another great way to build business credit is by applying for a business credit card. A business credit card is different from a personal credit card, and using it responsibly can help boost your credit score. You’ll want to choose a card that offers good rewards or cash back for your business expenses.

When you get a business credit card, be sure to make your payments on time and try to keep your balance low compared to your credit limit.

This will help you build a positive credit history. If you’re just starting, you might not qualify for a big limit right away, but that’s okay. Start with a smaller card and work your way up as your business credit improves.

7. Pay Your Bills on Time

Building business credit isn’t just about opening accounts and getting credit cards. It’s also about managing your finances responsibly. Paying your bills on time is one of the most important factors in building a strong credit score. This applies to everything—from vendor payments to your business credit card bills.

Make it a habit to pay your bills on time, and if you can, try to pay them off early. Timely payments will help your business credit profile grow, and they will also prevent you from paying late fees or damaging your reputation with vendors. Set up reminders or automatic payments to make sure you never miss a due date.

8. Monitor Your Credit and Make Adjustments

Once your business credit starts to take shape, it’s important to keep an eye on it. Regularly check your credit reports with Dun & Bradstreet, Experian, and Equifax to see how your business is doing. If you spot any mistakes or inaccuracies, be sure to dispute them right away.

Also, remember that your business credit will grow over time. As your LLC becomes more established, you’ll be able to secure more credit and favourable terms.

Keep working on maintaining a positive payment history and expanding your credit options as your business grows.

FAQs

How long does it take to build business credit?

It can take several months to start building a solid business credit profile. However, with consistent payments and good credit habits, you can see progress in as little as six months.

Can I build business credit without using my credit?

Yes, it is possible. By setting up a business bank account, applying for business credit cards, and working with vendors that report to business credit bureaus, you can build credit without relying on your credit.

Do I need to have a perfect credit score?

No, you don’t need a perfect credit score. Lenders will look at several factors when evaluating your business’s creditworthiness, including your payment history and how long your business has been in operation.

Conclusion

Building business credit for your new LLC doesn’t need to be intimidating. By following these simple steps, you can set your business up for long-term success.

As you work through the process, remember that patience is key—business credit takes time to build. But with persistence, good financial habits, and a little planning, you’ll get there.

So, now that you know the steps to take, what will you do first to get your LLC’s credit in order?