You can build business credit using an Employer Identification Number (EIN) by opening a credit card account or taking out a loan in the company's name then making on-time payments. First, you must incorporate the business, then obtain an EIN, and apply for a line of credit. Responsible usage over time will strengthen your business credit profile.
Establish your business entity
Register your business as a legal entity, such as a corporation or LLC. This step is essential to separate your personal and business finances.
Obtain an EIN
Apply for an EIN from the Internal Revenue Service. You can do this online through the IRS website. An EIN serves as the unique identifier for your business.
Establish a relationship with a bank
Use your EIN to open a dedicated business bank account. This is a recommended step so you can create a clear separation between your business and personal expenses.
Additionally, you can establish a relationship with the bank by doing so. This can be particularly helpful if the business is new and you would like to acquire credit lines in the future, although the bank account itself does not directly affect your credit.
Apply for a business credit card
Research and apply for a business credit card that reports to business credit bureaus. Use the card responsibly, keeping balances low and making on-time payments. These activities help build a positive business credit history.
Monitor and review your credit reports
Regularly monitor your business credit reports from major credit bureaus. Ensure that the information is accurate and up to date. Dispute any errors you find to maintain the integrity of your credit profile.
Pay other businesses on time
You can build credit by establishing accounts with vendors, suppliers, and service providers. Some companies may report your payment activity to business credit bureaus, like Dun & Bradstreet, Experian, and Equifax, which can raise your score over time.
Gradually expand your business credit
As your business’s financial profile strengthens, consider applying for additional credit lines, loans, or leases. Responsible credit use can further enhance your business’s credit history.
You can compare the best credit cards for new businesses and the best business credit cards overall right here at WalletHub.
This answer was first published on 06/13/23. For the most current information about a financial product, you should always check and confirm accuracy with the offering financial institution. Editorial and user-generated content is not provided, reviewed or endorsed by any company.
FAQs
It can take three or more years to build a strong credit history for your business. However, there are steps you can take to start immediately, and you may qualify for some business credit opportunities after just one year.
How do I build business credit with an EIN? ›
Take these steps to establish and build a solid credit rating for your company.
- Get your personal credit history in order. ...
- Register your business with an EIN. ...
- Register your business for a DUNS number. ...
- Open a business bank account. ...
- Apply for a business credit card. ...
- Pay vendors and suppliers early. ...
- Monitor your credit.
It can take three or more years to build a strong credit history for your business. However, there are steps you can take to start immediately, and you may qualify for some business credit opportunities after just one year.
Can I get a line of credit with EIN? ›
Just as your Social Security number is used to identify you as an individual, the EIN identifies a business as a legal entity. Lenders can use this number to access a business's credit history when assessing eligibility for a business line of credit with EIN only.
Does an EIN have a credit score? ›
While your personal credit score is tied to your Social Security number, your business credit score is tied to an Employer Identification Number — or EIN. This helps you keep your personal financial information private while you build and maintain your business credit score.
Can I use my EIN to buy a car? ›
Yes, it is possible to buy a car with an EIN number, you just need to be sure to clarify with the sales team that this is your intention. When buying the car, make it clear that it's a business purchase of the vehicle, not a personal one as this impacts which credit application you'll have to fill out.
How do I get a loan with my EIN number? ›
Can you apply for a SBA loan with just an EIN online? You can apply for a business loan with only an EIN, but you will need to provide other information as well, such as a social security number or tax ID number and a written out business plan.
How can I improve my EIN credit score? ›
Pay creditors on time — and early if possible
Payment history is the most important factor in determining your business credit score. Making debt repayments on time and in full will help you build a stronger business credit profile over time. While on-time payments are good, early payment is even better.
How to get business credit fast? ›
It starts by promptly establishing a business identity, getting an EIN, a DUNS number, and a separate bank account. From there, opening business tradelines (especially net 30 accounts), using a business credit card, making payments early, and maintaining smart credit utilization can help you make fast progress.
Can you build business credit in 30 days? ›
It's impossible to predict exact results since many different factors go into building business credit, but it's not unusual to see positive results in just a few months. Keep in mind it may take 30 to 60 days for new accounts to appear on business credit reports, so the sooner you start, the better!
The easiest business credit cards to get are secured options, like the Bank of America® Business Advantage Unlimited Cash Rewards Mastercard® Secured credit card. That's because these cards require a security deposit that acts as your spending limit.
What credit score do you need for a business line of credit? ›
Credit score: Your personal FICO Score and business credit report both play a role in determining your creditworthiness. Many lenders require a minimum credit score of 600 (or more) when you apply for a business line of credit, although having a higher score can help you secure a better interest rate.
What can I use my EIN to apply for? ›
This EIN is your permanent number and can be used immediately for most of your business needs, including:
- Opening a bank account.
- Applying for business licenses.
- Filing a tax return by mail.
You can build business credit using an Employer Identification Number (EIN) by opening a credit card account or taking out a loan in the company's name then making on-time payments. First, you must incorporate the business, then obtain an EIN, and apply for a line of credit.
What credit score does a new LLC start with? ›
When you form an LLC and obtain an Employer Identification Number (EIN) from the IRS, you create a unique identifier for your business. This EIN allows your LLC to open bank accounts, apply for loans, and build credit in its own name. An LLC starts with no credit score.
What does your business credit score start at? ›
Range: Personal credit scores range from 300 to 850. Business credit scores are from 0 to 100.
What credit score does an LLC start with? ›
This EIN allows your LLC to open bank accounts, apply for loans, and build credit in its own name. An LLC starts with no credit score. Just like an individual, an LLC must build its credit over time by engaging in responsible financial behavior, such as taking out loans and lines of credit and making payments on time.
Can you get a business credit card with no revenue? ›
Yes, you can get a business card if your business hasn't yet generated any income. Issuers understand that new businesses may not have business income yet, so be honest if you're just starting out and haven't generated income.
