What Is Business Credit?

Business Credit Explained

A shop owner or employee holds two items in bags.

Simon Ritzmann / Getty Images 


Business credit refers to the summary of a business’s financial history, which indicates its ability to repay its debts and other financial obligations.

Definition and Examples of Business Credit

Business credit is an estimation of a business’s risk, or ability to repay a loan or other financial obligations, much like personal credit.

A business credit report is generated with a credit score based on payment history, debts, and credit utilization, as well as general information about the business and information available in public records. 


Business credit functions separately from a business owner’s personal credit profile and is referenced when your business needs to borrow funds from a lender. 

For example, if your business needs more working capital to run its operations, you may consider applying for a cash flow loan. When you apply for this loan, lenders will look at your business credit for reference on your business’s finances as part of the application process.

This is similar to the process of an individual applying for a personal loan. However, the loan would be granted to the business itself and based off the business’s credit.

Personal credit reports are provided by the three main credit bureaus—Experian, Equifax, and TransUnion. They generally fall between 300 and 850.

In contrast, a business credit score has a different scale, generally ranging from 1 to 100. It’s reported by these credit bureaus:

  • Experian Commercial
  • Equifax Small Business
  • Dun & Bradstreet 


To generate a business credit report from Dun & Bradstreet, you’ll need to register with the agency. Registering will generate a unique D-U-N-S Number, which lenders can then reference.

How Business Credit Works

Whether you’re actively looking for a loan or still working to establish your business, it’s important to know how business credit works. 

Understanding how to build your business credit early on can help provide more options for financial assistance. It can also make it easier to separate your business’s credit and financial obligations from your own personal credit. 

Business credit can be generated from businesses that are registered as separate legal entities, such as a limited liability company (LLC) or a corporation. The business functions as a separate legal entity and is identified by its own employer identification number (EIN), which works like a Social Security number when acquiring loans and submitting tax returns.

Business credit is beneficial if you want to keep your personal finances separate from your business finances.


To generate a business credit report from Dun & Bradstreet, you’ll need to register with the agency. Registering will generate a unique D-U-N-S Number, which lenders can then reference.

Building Business Credit

Having good credit for your business provides many benefits, such as a higher chance of getting approved for loans, lower interest rates, and the ability to negotiate contracts. 

In order to generate a good credit score for your business, you’ll need to work on building your credit in the same manner as you build your personal credit. If you don’t have credit established just yet, there are a few steps you can take.

  1. Make sure to register your business so that it is legally established as a separate entity, such as an LLC or corporation. 
  2. Apply with the IRS to obtain an employer identification number (EIN), which can be used for credit applications.
  3. Open a bank account to conduct business transactions, which will help to separate personal and business finances as the account would be registered in the business’s name. 
  4. To begin establishing your credit, you’ll need to apply for credit, such as a small business loan or business credit card.
  5. Monitor your business credit report and credit score.

Types of Business Credit

There are various options to establish or improve your business credit. Some of the different types of business credit include:  

  • Business Credit Card: A business credit card provides an easy way to begin building business credit as it sets a credit limit, just like other credit cards, with funds that are paid off each month when used.
  • Line of Credit: A line of credit works similar to a credit card as it provides funds that are available to use when needed. You only pay interest on the amount of credit you use.
  • Term Loan: The typical, traditional loan offered by a bank or other lender is a term loan, which allows the business to borrow a sum and pay in installments. 
  • Vendor Credit: Businesses can purchase products or services using vendor credit, in which the purchases are made by financing the cost.
  • Service Credit: Service credit includes utilities and other bills in the business’s name, such as internet and phone lines. 

Key Takeaways

  • Business credit is a gauge of a business’s creditworthiness, or ability to repay loans based on its credit history and other factors.
  • Business credit separates the financial obligations and aspects of a business from its owner, allowing the business to generate its own creditworthiness rating. 
  • The process of referencing business credit is similar to personal credit, however business credit is generally scored based on a range of one to 100.
  • To establish business credit, there are several requirements including registering your business as a separate entity and applying for an employer identification number (EIN) with the IRS.

Was this page helpful?
The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
  1. U.S. Small Business Administration. “How to Establish Business Credit for the First Time.” Accessed Dec. 20, 2021. 

  2. myFICO. “What is a Credit Score?.” Accessed Dec. 20, 2021.

  3. Experian. “Small Business Credit at Experian.com.” Accessed Dec. 20, 2021.

  4. IRS. “Taxpayer Identification Numbers (TIN).” Accessed Dec. 20, 2021.

  5. Dun & Bradstreet. “Does Business Credit Affect Personal Credit?.” Accessed Dec. 20, 2021.

Related Articles