How To Establish, Build, and Access Business Credit

This Month’s Newsletter is brought to you by Business Credit 101!

If you are a business owner or if you are looking to start a new business, one of the most overlooked resources available to you is your business credit. There are so many benefits to establishing and building your business credit including:

Separate Liabilities from your personal to your business
Minimize personal DTI / Debt to Income Ratio
Get access to high limit credit accounts in the business name
Get access to Government programs and Grants
Open doors for vendor, business, and investor relationships
Reduce cost on business insurances and landlords scrutiny
Increase the value of your business for future Sale

Getting Started

The first step in establishing business credit is making sure your business is Credible in the eyes of the banks, lenders, and the business credit bureaus; Dun & Bradstreet, Experian, and Equifax Business credit divisions. There are 10 items or data points that must be in place so that your business is “Credible”.

Tier 1

Once your business is Credible, we then move on to earning a “Paydex” score. To earn a Paydex score you will need 3-5 business credit accounts to report to D&B. At this point, Round 1 or Tier 1 is completed and your business is in a position with a legitimate business credit profile. You are ready to move on to the next tier and qualify for government grants and business funding.

Paydex Score

A Paydex score is a score that is created by Dun & Brad street once you establish a business credit profile on their platform. The first thing you have to do is establish a “credible” business, set up a free Duns number, and then you’ll need 3 to 5 starter business credit reporting accounts that will report to D&B. Once you have 3 to 5 accounts reporting, you will then be issued a Paydex score. Getting a high Paydex score requires strategic payment timing. Your score is from 0 to 100 and 80+ is good 90+ is excellent.

​Keep Building – Tier 2

In Tier 2 you will begin to now have access to more powerful accounts with larger limits. You will be able to access a mixture of Net 30 accounts, Revolving Credit Lines, Retail accounts, and Fleet accounts.

​You are now building your business credit and momentum is on your side. By the end of this round and based on the accounts you set up in Tier 1 you should have at least 7-8 accounts. Reporting on your business credit profile.

You should have an 80 or higher Paydex score. Your business should be easy to find in public records, all of your data points are intact and match across all platforms.

Tiers 3-4

Tiers 3-4 are going to be more of the same from Tier 2, just with access to even bigger and better account options, collectively giving you access up to $100,000 plus of credit. Once you have completed Tier 4 you should have 14+ accounts reporting on your business credit profile.

Our partners at Business Credit 101 can help you from start to finish.

They can save you time and money on your business credit journey by providing you with clear step by step instructions.

Don’t wait until you need funding to start building! Click here to begin with a Free Business Credit 101 Builder Consultation today!

-Erik Kaplan