How to build business credit without using personal credit

As an entrepreneur or aspiring business owner, access to credit is essential for success. Business credit not only opens up significant funding that you can use to grow your company, but it also helps keep your personal and business finances separate.

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While many small business owners might use their personal credit to help kickstart their business credit journey, that’s not always a viable option. What if you don’t have a strong personal credit score, or you simply don’t want to tie your personal credit to your business?

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Luckily, you can establish strong business credit without using personal credit. In this article, we'll explore how to build business credit without using personal credit scores or personal guarantees.

What is business credit?

Business credit reflects your company's creditworthiness and determines its ability to borrow money. It's based on how your business manages its financial obligations. Building strong business credit can improve your access to financing, potentially securing better loan terms and interest rates, and enhancing your overall business reputation.

Business credit vs. personal credit

Before we get into the details of building business credit, it's important to understand the differences between personal and business credit.

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One of the core concepts of personal finances is that there are three main credit bureaus that monitor personal credit: Equifax, Experian, and TransUnion. These bureaus collect information about your personal credit history to determine your credit score, often called a FICO score. Your account behavior is among the biggest contributing factors to your personal credit score, particularly your payment history, debt, and account standing related to consumer debts like credit cards and mortgages.

Figuring out how to build company credit works differently. While Equifax and Experian also have business credit divisions, the main business credit reporting agency is Dun & Bradstreet (D&B). D&B has its own scoring model known as the PAYDEX Score, which is based on business credit information like payment history, credit utilization, and other financial data. Business entities receive a DUNS number from D&B; this is a crucial early step along the path of how to establish business credit.

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Is business credit separate from personal credit?

A key benefit of business credit is its separation from personal credit. This generally prevents business debts from impacting your personal credit score, allowing you to build a strong business credit profile independently.

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But while business and personal credit are distinct from one another, the separation between them can sometimes get a bit blurry. For example, when you apply for a business credit card, issuers will typically check your personal credit history. Additionally, negative payment history on a business credit card can sometimes show up on your personal credit score if the card reports to the consumer credit bureaus.

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Many business credit cards require a personal guarantee, which can also affect your personal credit score. These guarantees make you as the business owner responsible for any outstanding debts if your business defaults. These allow creditors to hold you personally liable for any debts on your credit card.

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Some business owners are comfortable leveraging their personal credit to build business credit, while others prefer to keep their personal and business credit entirely separate.

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No matter how you choose to approach your business finances, you have ways to build company credit.

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How do you build business credit?

Even though you understand the importance of separating your personal and business credit, you might still be scratching your head. “Okay, but how do I establish business credit?” Here, we dive into the concrete steps you can take to build a strong business credit profile without relying on your personal credit.

Establish a legal business entity

The easy way to build business credit from the get-go is to create a legal business entity. This could be a limited liability company (LLC), a corporation (S corp or C corp), or a partnership. Registering your business with your state's secretary of state or other governing body is crucial because it provides the necessary paperwork and legal structure to operate as a distinct entity.

After registering your business, you'll need to get an Employer Identification Number (EIN) from the IRS. This nine-digit number is necessary for business activities like opening a business bank account and applying for credit. Think of it as the equivalent of your business’s Social Security number (SSN).

Set up your business essentials

To both build credit and a strong business profile, you'll need to set up the following essentials:

• Business address: Get a physical address for your business, whether it's a commercial space, a virtual office, or a dedicated home office address
• Business phone number: Get a dedicated business phone number
• Business email address: Create an email address that includes your business's domain name (e.g., [email protected])
• Business website: Create a professional website that represents your business and what it offers

Having these essentials helps create a legitimate and professional business presence, which is crucial for building business credit.

Open a business bank account

Opening a bank account in your business's name is key for establishing a financial history and keeping your personal and business finances separate. A dedicated business bank account can also protect your personal credit score and finances from any legal or financial issues that may arise from your business.

Obtain a DUNS number

Dun & Bradstreet is the main business credit reporting agency, and getting a D&B number—also known as a DUNS number—is an important step in building your business credit history. This unique nine-digit number identifies your business and allows creditors and suppliers to report your payment history and other financial information to D&B.

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You can get a DUNS number for free by visiting the D&B website and following the application process. After submitting your application, D&B will mail you a verification code, which you'll need to enter on their website to complete the process and activate your DUNS number.

Establish trade credit with vendors

One of the clearest ways to build business credit fast is to establish trade credit, a type of tradeline that allows your business to make purchases from vendors and suppliers on credit—without requiring a credit check. Consistently making timely payments against your trade credit demonstrates your financial responsibility and helps build business credit.

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To establish trade credit, consider the following steps:

• Identify companies that extend credit to new businesses and report to business credit bureaus
• Make a purchase from each company and pay the invoice within the established payment terms—usually net 30, net 60, or net 90 days
• Ensure continued timely payments to maintain a positive payment history with the credit bureaus

By establishing these initial tradelines and making timely payments, you'll start building a positive payment history with D&B, which is essential for improving your business credit score and qualifying for higher credit limits. It will allow you to obtain business credit more easily in the future.

Apply for a business credit card or line of credit

As your business credit profile grows stronger, you'll have more opportunities to get business credit cards and lines of credit. Here are a few strategies to consider:

• Business credit cards: Many banks and credit card issuers offer business credit cards specifically designed for small businesses. These cards can be secured (requiring a refundable deposit) or unsecured, and they report your payment history and credit utilization to the business credit bureaus.
• Business lines of credit: A business line of credit works similarly to a credit card but typically offers higher credit limits. As your business credit profile improves, lenders may offer you unsecured lines of credit based on your creditworthiness.
• Vendor credit accounts: In addition to the initial trade credit you established, you can continue to open credit accounts with various vendors and suppliers. These accounts not only provide you with net terms for purchasing goods and services, but also contribute to your overall business credit history.

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Monitor and maintain your business credit profile

Building business credit is an ongoing process. It’s important to maintain good financial behavior over the long term and to monitor your credit profile on a regular basis. Here are a few tips to help you stay on track:

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• Review your business credit reports: Periodically check your business credit reports from D&B, Experian Business, and Equifax Business to ensure all the information is accurate and up to date
• Make payments on time: Timely payment is the most important factor in maintaining a strong business credit score. Set up automatic payments or reminders to ensure you never miss a due date.‍
• Keep credit utilization low: While business credit scoring models are generally more lenient regarding credit utilization, it's still a good idea to keep your balances well below your credit limits
• Monitor for fraudulent activity: Regularly review your business credit reports for any signs of fraudulent activity or errors, and promptly dispute any inaccuracies with the appropriate credit bureau

By following these steps consistently, you'll not only maintain a strong business credit profile, but also increase your chances of qualifying for higher credit limits and better terms in the future.

How to get business credit for a startup

Starting a business can feel daunting when it comes to securing credit, especially with no established history or revenue. However, even startups can access lines of credit with the right approach. Many of the strategies more mature companies use are applicable to new businesses.

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To begin establishing new business credit, first obtain an Employer Identification Number (EIN), open a bank account, and secure a DUNS number from Dun & Bradstreet. Then, consider exploring alternative options like the Ramp Business Credit Card, which may offer credit lines without relying solely on traditional credit scores or credit history.

Business credit cards with no personal credit check

Here's a short list of both established and startup business credit cards with no credit check.

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• Ramp Corporate Credit Card
• OpenSky Secured Visa Credit Card
• BILL Divvy Corporate Card
• Stripe Corporate Card
• FairFigure Capital Card
• Rho
• Lunar
• Mercury

Build your business credit with Ramp 

Ramp’s corporate charge card doesn't require a personal guarantee or credit check. Instead, we look at your monthly revenue and how much money you have in your business bank accounts. This simplifies the application process and usually gives you access to a higher credit limit than you’d get from a traditional business credit card.

The key advantages of building with Ramp include:

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• No hard inquiry on your personal credit report when applying for Ramp’s corporate card
• An average net savings of 5% thanks to features designed to reduce business expenses
• Advanced expense management tools, including spend controls and real-time expense tracking
• Seamless integration with popular accounting software for streamlined financial management

Ramp's modern finance platform, with automated expense reporting, customizable spending limits, and real-time transaction monitoring, empowers you to make informed decisions and optimize your business spending. With Ramp, you can focus on growing your business while we take care of the rest.

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