How to Build and Improve Your Business Credit Score

Table of Contents

1. Introduction
2. Why Business Credit Matters
3. Business Credit vs. Personal Credit
4. Understanding Business Credit Scores
5. 8 Steps to Establish Business Credit
6. Strategies to Improve Your Business Credit Score
7. Common Mistakes That Damage Business Credit
8. Monitoring Your Business Credit
9. Recovering from Bad Business Credit
10. How Delta Capital Group Can Help
11. Conclusion

Introduction

Your business credit score is one of the most valuable assets your company can develop. A strong business credit profile opens doors to favorable financing terms, better supplier relationships, and increased opportunities for growth. Yet many business owners either don’t know their business credit score or don’t understand how to build it effectively.

Whether you’re a startup looking to establish credit for the first time or an established business aiming to improve your existing score, this comprehensive guide will provide you with the knowledge and actionable strategies you need to build a robust business credit profile.

At Delta Capital Group, we’ve helped thousands of businesses access funding since 2015, and we’ve seen firsthand how a strong credit profile can make all the difference in securing the capital needed for success.

Why Business Credit Matters

The Impact of Strong Business Credit

A solid business credit profile delivers multiple benefits:

• Better financing terms: Access larger loan amounts at lower interest rates
• Increased credit limits: Obtain higher credit limits from vendors and lenders
• Improved cash flow: Secure longer payment terms from suppliers
• Enhanced business relationships: Build credibility with potential partners
• Separation of personal and business finances: Protect your personal assets
• Competitive advantage: Win contracts that require strong credit verification
• Business valuation: Increase your business’s worth when seeking investors or considering a sale

The Real Cost of Poor Business Credit

The difference between excellent and poor business credit can be substantial:

Loan Amount	Term	Interest Rate with Excellent Credit	Interest Rate with Poor Credit	Additional Cost
$100,000	5 years	8%	18%	$29,344
$250,000	7 years	7%	16%	$157,913
$500,000	10 years	6%	15%	$450,441

As this table illustrates, poor business credit can cost you tens or even hundreds of thousands of dollars over the life of a loan.

Business Credit vs. Personal Credit

Key Differences

While personal and business credit scores both reflect creditworthiness, they differ in several important ways:

Factor	Personal Credit	Business Credit
Scale	300-850 (FICO)	Varies by bureau (e.g., 0-100 for Dun & Bradstreet)
Information used	Personal payment history, debt levels, credit mix	Business payment history, public records, company size, industry risk
Privacy	Protected by law	Publicly available
Age consideration	Age of accounts is a factor	Time in business is more heavily weighted
Inquiry impact	Multiple inquiries can lower score	Less sensitive to multiple inquiries

Why Separating Personal and Business Credit Matters

Many small business owners use personal credit to launch their businesses, but this approach has significant limitations:

• Limited growth potential: Personal credit limits are typically much lower than business credit limits
• Personal liability: Business debts can impact your personal credit score and put personal assets at risk
• Tax complications: Mixing personal and business finances creates tax headaches
• Professional perception: Separate business credit enhances your company’s professional image

Understanding Business Credit Scores

Major Business Credit Bureaus

Unlike personal credit, which is dominated by three major bureaus, business credit is reported by several specialized agencies:

Dun & Bradstreet (D&B)

• PAYDEX Score: Ranges from 0 to 100, focusing primarily on payment history
• D&B Credit Score: Predicts the likelihood of business failure within 12 months
• D&B Rating: Reflects company size and financial strength

Experian

• Intelliscore Plus: Ranges from 1 to 100, combining payment data with public records
• Financial Stability Risk Score: Predicts the likelihood of business failure
• Business Credit Score: Similar to personal credit scores but for businesses

Equifax

• Payment Index: Measures payment history on a scale of 0 to 100
• Business Credit Risk Score: Predicts payment delinquency risk
• Business Failure Score: Assesses the likelihood of business closure

FICO Small Business Scoring Service (SBSS)

• Used by the SBA and many lenders
• Scores range from 0 to 300, with 140+ typically needed for SBA loan approval
• Combines business and personal credit data with business financials

What Factors Influence Your Business Credit Score?

While each bureau uses its own algorithm, these factors generally affect your business credit score:

1. Payment history (40-50%): Timely payments to vendors and creditors
2. Credit utilization (15-25%): How much of your available credit you’re using
3. Length of credit history (5-15%): How long you’ve had business credit accounts
4. Company information (10-20%): Industry, size, and years in business
5. Public records (10-15%): Bankruptcies, liens, judgments, and UCC filings
6. Credit mix (5-10%): Various types of credit accounts (revolving, installment, etc.)

8 Steps to Establish Business Credit

1. Legally Structure Your Business

• Register your business: Form an LLC, corporation, or other formal business structure
• Obtain an EIN: Apply for an Employer Identification Number from the IRS
• Open a business bank account: Separate business and personal finances
• Register with your state: Get necessary licenses and permits

2. Get Your Business Listed with Credit Bureaus

• Apply for a D-U-N-S Number: Register with Dun & Bradstreet (free)
• Check your listings: Verify your business information with Experian and Equifax
• Update your business information: Ensure consistency across all bureaus

3. Establish Trade Lines with Suppliers

• Find vendors that report to credit bureaus: Start with office supply companies, shipping services, and industry-specific suppliers
• Apply for net terms: Request 15, 30, or 60-day payment terms
• Start small: Begin with manageable amounts and always pay on time
• Ask current vendors: Request that existing suppliers report your payment history

Examples of vendors that typically report to business credit bureaus:

• Quill
• Uline
• Grainger
• FedEx
• Staples Commercial

4. Open a Business Credit Card

• Start with a secured business credit card if necessary
• Apply for cards that report to business credit bureaus
• Use the card regularly for business expenses
• Pay the balance in full each month

5. Apply for a Small Business Loan or Line of Credit

• Consider an SBA microloan: These smaller loans (up to $50,000) have less stringent requirements
• Look into community development financial institutions (CDFIs): These often work with businesses building credit
• Apply for a business line of credit: Provides flexibility and builds credit when used responsibly
• Consider alternative lenders: Companies like Delta Capital Group offer funding options for businesses at various credit stages

6. Make On-Time or Early Payments

• Set up automatic payments: Never miss a due date
• Pay early when possible: Some scores (like D&B PAYDEX) reward early payments
• Create payment reminders: Stay on top of all due dates
• Document all payments: Keep records in case of reporting errors

7. Maintain Good Business Financials

• Keep financial records current: Up-to-date bookkeeping demonstrates professionalism
• Monitor cash flow: Ensure you can meet payment obligations
• Maintain profitable operations: Strong financials strengthen credit applications
• Work with accounting professionals: Expert guidance improves financial management

8. Keep Business Information Updated

• Update business listings: Promptly notify credit bureaus of any changes
• Maintain consistent information: Use the same business name, address, and phone number across all applications
• Create a professional website: Enhances credibility and verification
• Establish business phone and address: Avoid using personal contact information

Strategies to Improve Your Business Credit Score

For Established Businesses

1. Increase your credit mix

• Add different types of credit accounts (term loans, lines of credit, credit cards)
• Each type demonstrates different aspects of creditworthiness

2. Decrease credit utilization

• Aim to use less than 30% of available credit
• Request credit limit increases on existing accounts
• Pay down balances before statement closing dates

3. Work with larger suppliers and lenders

• Larger companies are more likely to report to multiple credit bureaus
• Establish accounts with national vendors and financial institutions

4. Resolve any negative items

• Address collections accounts promptly
• Settle outstanding tax liens
• Dispute any inaccurate information

5. Create a strategic debt repayment plan

• Prioritize accounts reporting to business credit bureaus
• Consider the debt snowball or avalanche method for systematic repayment

6. Ask for trade references

• Request that long-term vendors provide trade references
• Submit these references to credit bureaus that accept them

For Startups and New Businesses

1. Start with a business credit card

• Even with limited history, you may qualify for a business card
• Use it responsibly to begin building your credit profile

2. Leverage your personal credit strategically

• Some business lenders will consider personal credit for initial funding
• Use this funding to establish business credit

3. Start with small credit limits

• Begin with modest credit amounts you can easily manage
• Request increases after 6-12 months of positive payment history

4. Apply for business-building credit products

• Consider credit builder loans specifically designed for new businesses
• Look into secured business credit cards that report to business bureaus

5. Join industry associations

• Membership can enhance credibility with potential creditors
• Some associations offer member financing programs

6. Work with business credit specialists

• Consider professional help to accelerate credit building
• Expert guidance can help avoid common pitfalls

Common Mistakes That Damage Business Credit

Mixing Personal and Business Finances

• Using personal credit cards for business expenses
• Co-mingling funds in a single account
• Failing to establish business banking relationships

Inconsistent Business Information

• Different business names across accounts
• Multiple addresses or phone numbers
• Inconsistent entity types on applications

Poor Payment Practices

• Late payments to vendors or lenders
• Skipped payments on any accounts
• Allowing accounts to go to collections

Excessive Credit Applications

• Multiple applications in a short timeframe
• Applying for inappropriate credit products
• Failing to check qualification requirements before applying

Ignoring Business Credit Reports

• Not reviewing reports regularly
• Failing to dispute errors
• Overlooking identity theft warning signs

Closing Positive Accounts

• Canceling oldest credit accounts
• Closing accounts with positive payment history
• Reducing overall available credit

Monitoring Your Business Credit

Why Regular Monitoring Is Essential

• Catch reporting errors: Mistakes happen, and they won’t fix themselves
• Detect identity theft: Spot suspicious activity before serious damage occurs
• Track improvement: Measure progress toward credit goals
• Prepare for financing: Know your score before applying for loans

How to Monitor Your Business Credit

1. Sign up for credit monitoring services

• D&B CreditSignal (free for basic alerts)
• Experian Business Credit Advantage
• Equifax Business Credit Report
• Nav (offers monitoring across multiple bureaus)

2. Schedule regular reviews

• Check reports quarterly at minimum
• Review before major financing applications
• Monitor more frequently when actively building credit

3. What to look for in your reports

• Verify basic business information
• Confirm all listed accounts belong to your business
• Check payment histories for accuracy
• Review any public records or collections
• Note changes in scores over time

4. How to dispute errors

• Contact each bureau directly
• Provide documentation supporting your claim
• Follow up until resolution
• Keep records of all communications

Recovering from Bad Business Credit

Assessing the Damage

1. Get complete copies of all business credit reports
2. Identify specific negative items
3. Create a timeline of when negative items will age off
4. Determine which issues to address first

Step-by-Step Recovery Plan

1. Bring all accounts current

• Prioritize bringing delinquent accounts up to date
• Contact creditors to arrange payment plans if necessary

2. Settle collections and charge-offs

• Negotiate settlements for less than full balance when possible
• Get all agreements in writing before making payments
• Request “paid as agreed” status when settling

3. Address tax liens and judgments

• Pay or set up payment plans for tax obligations
• Obtain release documents once paid
• File these documents with appropriate authorities

4. Establish new positive credit

• Open small credit accounts you can manage
• Create a perfect payment history going forward
• Consider secured credit options if necessary

5. Request goodwill adjustments

• Contact creditors where you had a good history before problems
• Explain circumstances and request negative information removal
• Provide documentation of current stability

6. Develop better financial management

• Create systems to prevent future issues
• Implement strict budgeting and cash flow monitoring
• Consider working with financial professionals

Timeline for Improvement

Credit Issue	Typical Impact Duration	Recovery Strategy
Late payments	2-3 years	Establish 24+ months of on-time payments
Collections	7 years	Settle and request deletion or “paid as agreed” status
Bankruptcies	7-10 years	Rebuild with new accounts immediately
Tax liens	7 years after payment	Pay promptly and file release documents
High credit utilization	Immediate upon correction	Pay down balances below 30%

How Delta Capital Group Can Help

At Delta Capital Group, we understand that building business credit is a journey. Since 2015, we’ve specialized in providing funding solutions for businesses at all stages of credit development.

Our Approach to Business Credit

• Credit-building funding options: Solutions designed specifically to help establish or improve business credit
• Reporting to business credit bureaus: Many of our funding products report to major bureaus, helping build your profile
• Expert guidance: Our team provides strategies tailored to your specific credit situation
• Flexible approval criteria: We look beyond just credit scores when evaluating funding applications

Funding Solutions for Every Credit Stage

For New Businesses Building Credit

• Starter funding packages: Smaller amounts with straightforward approval requirements
• Equipment financing: Using the equipment as collateral can help secure funding with limited credit history
• Business lines of credit: Revolving credit that builds your profile with each payment cycle

For Businesses Improving Credit

• Bridge financing: Short-term options while you improve your score
• Merchant cash advances: Based on sales rather than credit scores
• Revenue-based financing: Tied to business performance instead of credit history

For Businesses with Established Credit

• Term loans: Larger amounts with favorable rates and longer terms
• Premium lines of credit: Higher limits and better terms
• Custom financing solutions: Tailored specifically to your business needs

The Early-Month Advantage

Applying for funding early in the month provides several advantages, especially for businesses working on their credit profiles:

• Lenders have fresh monthly funding allocations
• Your application receives more thorough consideration
• You have time to address any documentation issues
• Approval and funding can be completed before month-end expenses

Conclusion

Building strong business credit is a deliberate process that takes time, but the benefits are well worth the effort. A solid business credit profile reduces funding costs, increases available capital, and creates more opportunities for your business to thrive.

Remember these key principles:

• Separate personal and business finances completely
• Establish relationships with creditors that report to business bureaus
• Pay all obligations on time or early
• Monitor your reports regularly and dispute errors promptly
• Address negative items quickly and strategically
• Work with financial partners who understand your business goals

At Delta Capital Group, we’re committed to helping businesses build and leverage their credit profiles to achieve sustainable growth. Our funding solutions are designed to support you at every stage of your business credit journey.

Ready to take the next step in building your business credit and accessing the funding you need? Apply now or call us at (877) 230-1525 to discuss your options.

Delta Capital Group – Funding Solutions for Business Success Since 2015