First Steps to Build Credit

Building a good credit history requires completing the required steps. The first steps are simple and within reach of any business.

The First Step Is to Organize Properly

In order to obtain business credit, it will be necessary to create a credit-ready business. A business will have to be legally organized as a separate entity in order to qualify for business credit. This will require meeting the registration requirements of your state, and will usually consist of filing a document with the Secretary of State or an equivalent agency, and paying a small fee to complete the process.

You will also need to obtain a taxpayer identification number from the Internal Revenue Service, which can be done online, and can be completed in only a few minutes at no cost.

After completing those steps, you should notify credit reporting agencies that you have started a business. You will then receive an identification number known as a D&B D-U-N-S® number, that will act like a Social Security Number in many ways. This number will be used on all business credit accounts, and will be the key to creating a credit history.

The Next Step Is to Obtain Credit

Credit reporting agencies will not be able to calculate a credit score until you have credit. Vendors and other creditors will report your payment history, and that data will be used in the scoring process. It may seem difficult to obtain credit at first, but small amounts of credit may be available to almost every new business.

Large credit lines will most likely be out of reach, but with small amounts of credit and a history of on-time payments, you should be able to obtain larger loans in a relatively short amount of time.

Unlocking credit will require that you create a credit history. Although this may not be a large loan as many small-business owners would prefer when they start a business, the credit history will one day make the loan possible.


Michael Carr is a small business expert who has been involved in the successful development of three small businesses.