Business Credit
Definition
Business credit is a credit profile established in a company's name (not the owner's personal name) that reflects the business's ability to borrow and repay obligations. Business credit is tracked by three major bureaus: Dun & Bradstreet, Experian Business, and Equifax Business. Building strong business credit separates personal and business financial liability, improves access to financing, enables higher borrowing limits, and can reduce the cost of insurance and vendor terms. Key steps include incorporating the business, obtaining an EIN, getting a DUNS number, opening trade accounts, and paying all obligations on time or early.
Example
Over 12 months, a business owner incorporates an LLC, gets an EIN and DUNS number, opens 5 Net 30 vendor accounts, obtains a secured business credit card, and pays everything early. They now have a Paydex Score of 85, an Experian Business score of 78, and qualify for a $100,000 unsecured business line of credit.
Related Terms
DUNS Number
A DUNS (Data Universal Numbering System) number is a unique nine-digit identifier assigned to busine...
Paydex Score
The Paydex Score is a business credit score developed by Dun & Bradstreet that ranges from 0 to 100 ...
Net 30
Net 30 is a payment term indicating that the full invoice amount is due within 30 calendar days of t...
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