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Business Insights

How to Build your Business Credit Score

Elizabeth Wisniewski
10 minutes to read
What is a business credit score?

Your business credit score is a number ranging from 300-850 and serves as a measure of your business’ creditworthiness and your ability to manage borrowed funds responsibly on behalf of your business. Your credit score is calculated by evaluating various aspects of your credit history, and tradelines play a significant role in this process.  

A tradeline is an account that appears on your credit report. There are two types of tradelines: revolving and installment. Revolving tradelines include credit cards, they have a credit limit, and the borrower can use up to the limit. On the other hand, installment tradelines include various types of loans. The borrower borrows a lump sum and makes monthly payments for the duration of the loan term. 

To establish a business credit, you will need to open accounts in your business’ name and tax ID. Your business credit score is a top factor in determining your eligibility for a loan. Lenders rely on credit scores to gauge whether a borrower can be trusted to repay the loan 

How does a business get a credit score?

For new and growing businesses, it’s important to capture all business transactions in the name of your business, using your business’ tax ID, within your business’ bank account. By utilizing funds in your business’ name, payment records are reported to business credit bureaus such as Dun & Bradstreet, Experian, and Equifax. These credit bureaus compile your credit history length, payment history, and credit use to determine a business credit score for your company. 

How can you build your business credit score?

Good news! There are many ways to build your business credit score. Here are some ways to build your credit score, keeping in mind these suggestions pertain to accounts and use in your business’ name: 

  • – Open a credit card account for your business 
  • – Make timely payments on business expenses in the name of your business 
  • – Keep credit utilization low 
  • – Diversify your credit mix by engaging in different types of credit like commercial mortgages, term loans, lines of credit and credit cards 
  • – Avoid opening too many accounts at once 
  • – Keep old accounts open 
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Additionally, you can be proactive in building your credit score by tapping into programs like Nav Prime. Nav’s Prime program helps you strengthen your business’s financial health profile by providing you detailed credit reports to build credit and act on personal and business credit insights, along with tradeline reporting. Some benefits of opening a Nav Prime Card are…

  • – Repayment for purchases are reported monthly as a tradeline 
  • – Charge card with no security deposit or annual fee 
  • – Link your business bank account to set your limit and repay your balance 
  • – Daily automatic repayment to minimize risk of overdue payments 
 
Looking to finance your small business? 

NEWITY provides access to capital, primarily through the SBA 7(a) loan program. Through our platform, you can easily apply for a low-interest, long-term small business loan up to $500K. We’ve designed our system to check your eligibility and potential loan amount without affecting your credit score.  

When you apply through NEWITY, we’ll conduct a soft credit pull, which means we review your credit without it being linked to a specific credit application, ensuring no impact on your credit score. To learn more about building and maintaining your credit score, click here. Improving your credit score can fast-track your journey to securing better funding options for your business. 

Unlock better funding options today.

To qualify for an SBA 7(a) small business loan, your business must be:

  1. U.S.-based and operated
  2. Owner supported / owner funded
  3. Eligible per the SBA’s requirements

Your loan amount will determined by the business’ average annual revenue, FICO score, and years in business