Choose the Best Business Credit Builder Program for Your Needs (2024)

FAQs

What is the most effective tool for building credit? ›

Applying for a secured credit card.

Secured credit cards require a cash deposit (often a minimum of $200) to get started, but they let you access this amount immediately as a line of credit. The card issuer then reports your payments to the credit bureaus, which helps you build credit over time with responsible use.

A business credit builder loan is a product designed to help small business owners improve their business credit scores with installment payments. It's one of the few financial tradelines you can qualify for without a good business credit history.

Equifax's Business Credit Risk Score ranges from 101 to 992, with 992 being the highest score you can obtain. There's no agreed upon number on this scale that indicates good business credit, but as with the others a higher score is better.

If you have a good to excellent score (670-850 points) your application for a business card may be accepted even if your business credit score is low or non-existent.

Make small purchases and pay them off quickly

Credit bureaus look most favorably on on-time and early payments, even if they're for relatively small amounts. If you're building credit from scratch and are on a tight budget, this could be an effective approach to get some momentum on your card.

This can benefit your business in several ways, including: More flexibility and access to capital if and when you need it. Lower costs of borrowing (better rates are offered to businesses with good credit)

Can You Get Business Credit Right Away? While it takes about 12 months to build solid business credit and as many as three years to build a comprehensive credit profile, you can start building at least some business credit within the first six months.

If you make regular on-time monthly payments, credit-builder loans are a good opportunity to improve your credit scores. Higher credit scores mean you'll have a better chance of being approved to take on important future debt, such as mortgages and auto loans.

Forming an LLC or corporation creates a separate legal entity with its own credit score different from the business owner(s) 's personal credit score. This differs from sole proprietorships and partnerships, where the business's credit is tied to personal credit profiles.

What is a good Duns and Bradstreet 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.

Qualifying for an Amex business card isn't as difficult as you may think. If you're a sole proprietor, you may be able to complete the application using your name as the business name and your Social Security number as your business tax ID.

Bank of America® business credit cards generally require excellent personal credit scores (a FICO of 720+) to qualify. If your score is in the good range (690 to 719), you may want to consider other small-business credit cards.

The primary credit scoring models are FICO® and VantageScore®, and both are equally accurate. Although both are accurate, most lenders are looking at your FICO score when you apply for a loan.