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8 Ways to Improve Your Small Business Credit Rating

Like your personal credit rating, your small business credit score is a key factor when it comes to securing funding. The higher your small business credit score, the less risk lending to your business carries, making it more likely for banks and other creditors to give you access to the money you need to grow.

Top Benefits of Improving Your Small Business Credit Rating

Being approved for a small business loan is only one of the benefits of having a good credit rating. Improving your credit as a small business can help you:

  • Get financing approved at more favorable rates
  • Earn trust from vendors and suppliers
  • Give your business a strong reputation in your industry
  • Help persuade investors to back your company
  • Decrease your insurance costs
  • Open up business opportunities that require a good score (like contracts with government agencies or large corporations)
  • Give you access to credit needed to respond to a crisis or disaster
  • Enable you to separate your personal and business finances
  • Avoid the need to leverage personal credit or other assets to support your company

If you’re looking to expand and grow your business, improving its credit rating should be a priority.

The Difference Between Personal and Small Business Credit

While both personal and business credit scores impact your ability to get financing, there are some differences to keep in mind. The tactics you would employ to improve your personal score are different than those that will work best for your small business, as are the reporting agencies for each. For example:

  • Personal credit is tied to your Social Security Number, whereas small business credit is linked to its Federal Employer Identification Number (EIN).
  • Experian, TransUnion, and Equifax primarily deal with personal credit reports, while business credit reports are sourced through Dun & Bradstreet, Experian Business, Equifax Business, (and others).
  • Personal ratings are based on your debt repayment history and credit utilization; business credit ratings consider these as well, in addition to things like time in business, company’s size, industry risk, recent credit applications, and revenue.
  • Personal scores are private, requiring permission to access; however, business credit ratings can be obtained easily by your suppliers, partners, potential investors, prospective customers, and more.
  • Your personal credit generally doesn't affect your business finances, however, your business credit can negatively impact your personal finances.


8 Ways to Improve Your Small Business Credit Score

With both personal and business credit, a higher score indicates a lower risk to creditors. Lower utilization of credit is another favorable marker for both personal and business credit.

For your small business, both mean a lower perceived risk for investors, vendors, suppliers, and other stakeholders. But to improve your small business credit, there are things to do as well as things to avoid.


Set up your business as a limited liability company (LLC) or corporation to separate your personal and business finances. As part of registering your business, get a Federal Employer Identification Number (EIN), and follow the steps to register your company with your state, county, and city as required by law.

Not sure what’s required in your state? Use the Small Business Association (SBA) state look-up tool to get started.


Set up a small business bank account for your business and use it to manage your company’s finances, from payroll to bill paying.


Get a credit card for your business with a bank that reports to the major credit bureaus (e.g., Dun & Bradstreet, Experian Business, or Equifax Business, among others). Use it to start building a credit history for your company by making purchases and paying on time, or even consistently paying off the balance in full.


As mentioned above, Dun & Bradstreet is one of the major business credit bureaus. Be proactive in ensuring your business credit is established and monitored by claiming your DUNS number (DUNS stands for Data Universal Numbering System). Getting your DUNS number ensures that a Live Business Identity is started for your business and shows other companies, government agencies, and financial institutions that your business is active.


Adding your business to online business directories makes it look more legitimate and can even help customers find your business. To do this, make sure you have a business phone number, email, and website, giving your brand more visibility and credibility online.


Setting up a business line of credit before you need it offers options for your small business should something unexpected occur. It can provide access to capital if, for example, your equipment breaks down, you need to make some repairs, or you need to cover payroll or keep up with bills during a slow season.


Periodically (e.g., annually) or if there is any unusual activity on your accounts, request copies of your credit reports from the major reporting bureaus or use a credit monitoring site like (you can try it free for 7 days). Not only will you see the progress you're making in improving your small business credit, but you'll be able to spot and dispute any irregularities with the credit bureaus.


Just as creditors look at your income-to-debt ratio when considering your personal creditworthiness, business lenders consider how much debt your business already has and its ability to repay it. Keeping your debt low and paying it off quickly sends a strong signal that your business is a low risk for creditors.

The Consumer Financial Protection Bureau (CFPB) recommends a debt-to-revenue ratio of 36% or less. While this is geared toward personal credit, it’s a sound guideline for small businesses as well. You can complete the CFPB's online debt log and calculator to determine what your company’s current debt-to-income ratio is or calculate it using the formula below:

Total Debt Repayments ÷ Gross Monthly Revenue
For example, if your business has a monthly revenue of $40,000 and the amount of money needed to satisfy credit-based monthly payments is $2,700, your debt-to-income ratio would be 2,700/40,000, or 6.7%.

8 Do's and Don'ts of Small Business Credit

In addition to the steps above, there are things you can do in the course of your operations to further boost your company’s credit rating (and some things to avoid):

  1. Do choose vendors and suppliers that report to credit bureaus (or request that they do) so your on-time payments build your small business credit history.
  2. Do produce and monitor your company’s financial statements monthly (e.g., balance sheet, income statement, and cash flow statement).
  3. Do educate yourself on business finance and credit management.
  4. Do choose a bank that has experience working with and understands the unique challenges of running a small business.
  5. Do strive to pay your bills on time, from credit-related expenses to your taxes, payroll, suppliers, and so on.
  6. Don’t intermix your business and personal finances – it can put both at risk.
  7. Don’t fail to stay legally compliant, including following all local, state, and federal regulations.
  8. Don’t fail to file or pay your taxes as legal issues can negatively impact your business’ creditworthiness.


About one-third (34%) of the 33.3 million small businesses in the U.S. applied for small business loans in 2021, but only 31% got the financing they needed. This left a lot of small enterprises lacking the financing needed to grow and thrive. Make sure that your business is financially healthy and can get access to capital when needed by working systematically and strategically to boost your credit score.

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