Step 1: Establish your business as being credible with major credit agencies.
Businesses must comply with the corporate guidelines established by agencies and financial institutions, including Dun & Bradstreet and Experian, in order to establish credit. These agencies want to ensure thatthe entity is a real business and require that it be incorporated (LLC, S Corp or C Corp), have a physical address, a valid phone number, a website and other limited guidelines.
Step 2: Create a credit file.
Once compliance is established, then an actual business credit file is created. The file establishes a unique profile with D&B and Experian to facilitate the tracking of credit history and the development of a business credit score. In the case of D&B, a PayDex score is the assigned numerical evaluation of a company or organization’s credit-worthiness.
Step 3: Build a business credit history.
After a credit file is established, the business has the opportunity to build a credit history by working with credit and financial institutions who report to D&B. Approximately 10% of all credit and lending institutions report to D&B, so it’s critical that a business owner is properly guided through building a business credit history that maximizes access to credit and lending —while creating the strongest credit score possible.
The business credit score is analogous to a personal credit score except for one fundamental issue—the business credit score is not limited by the personal credit limits that are established for all consumers.