Three years ago, a subcontractor I know couldn't get a $10,000 equipment lease approved. His personal credit was okay, but he had no business credit history.
Last month, that same contractor secured a $250,000 line of credit for his company. The difference? He spent those three years deliberately building business credit.
Business credit opens doors: better equipment financing rates, larger credit lines, supply accounts with better terms, and bonding capacity. Yet most subcontractors don't know how to build it.
Here's the playbook.
What Is Business Credit?
Business credit is a financial profile attached to your company, separate from your personal credit. It's tracked by business credit bureaus — primarily Dun & Bradstreet, Experian Business, and Equifax Business.
Just like personal credit, business credit includes:
The key difference: business credit reporting is less standardized and more varied than personal credit. Not all creditors report to all bureaus, and reporting is often slower.
Why Business Credit Matters for Subcontractors
Equipment Financing
Better credit means better rates on equipment purchases and leases. On a $100,000 piece of equipment, a 3% rate difference saves $15,000+ over a five-year loan.
Supply Accounts
Suppliers extend better terms (net-30, net-60) to businesses with established credit. This improves cash flow.
Bonding Capacity
Surety companies look at business credit when evaluating bonding limits. Better credit = bigger bonds = bigger projects.
Lines of Credit
Working capital lines help smooth cash flow gaps. Strong credit unlocks larger lines at lower rates.
Vendor Relationships
Vendors check credit before extending terms. Poor credit means COD or cash in advance.
Separation from Personal Finances
Building business credit protects your personal credit from business ups and downs.
Step 1: Establish Your Business Entity
You can't build business credit without a proper business structure:
Choose Your Entity Type
LLC or corporation are best for credit building. Sole proprietorships and general partnerships mix personal and business credit.
Get an EIN
Your Employer Identification Number (from the IRS) is like a Social Security number for your business. You'll need it for all business credit applications.
Register with the State
Make sure your business is properly registered and in good standing with your state.
Get a D-U-N-S Number
Dun & Bradstreet uses this unique identifier for your business. It's free — apply at dnb.com.
Step 2: Separate Business and Personal Finances
Credit bureaus look for signs that your business is truly separate from you personally:
Business Bank Account
Open a dedicated business checking account. Use it for all business transactions.
Business Address
Use a commercial address or at minimum a dedicated business PO box.
Business Phone
A dedicated business phone number, not your personal cell.
Business Website
A professional website establishes legitimacy.
Business Email
Use a professional email (name@company.com), not a personal Gmail.
Step 3: Start Building Credit
Now the actual credit building begins:
Trade Credit (Net-30 Accounts)
These are the easiest starting point. Many suppliers will extend net-30 terms even to new businesses.
Start with suppliers that report to business credit bureaus:
Make small purchases, pay on time (or early), and your payment history builds.
Business Credit Cards
Once you have some trade credit history, apply for business credit cards. Start with:
Use the cards for regular business expenses and pay the balance in full each month.
Credit Builder Loans
Some lenders offer loans specifically designed to build credit. You borrow a small amount, make payments over time, and build history.
Step 4: Monitor and Optimize
Building credit is a long-term project. Monitor your progress:
Check Your Credit Reports
Review your business credit reports from all three bureaus at least annually. Look for:
Maintain Good Habits
Address Negative Items
If you have late payments or other negative marks:
Business Credit Scores Explained
Each bureau has its own scoring system:
Dun & Bradstreet PAYDEX
Experian Intelliscore Plus
Equifax Business Credit Risk Score
FICO SBSS (Small Business Scoring Service)
Timeline Expectations
Building business credit takes time:
**Months 1-3:** Establish entity, get EIN, D-U-N-S, and basic infrastructure
**Months 4-6:** Open first trade credit accounts, make purchases, pay on time
**Months 7-12:** Add business credit card, continue building history
**Year 2:** Expand credit lines, add more trade accounts
**Year 3+:** Qualify for larger financing, better terms, stronger bonding
Expect 18-24 months before you see significant benefits from business credit building.
Mistakes to Avoid
Mixing Personal and Business
Using personal accounts for business transactions muddles your credit profiles.
Too Many Applications at Once
Hard inquiries can hurt scores. Space out applications.
Ignoring Payment Terms
Paying late — even by a day — damages your credit profile.
Neglecting Old Accounts
Closing your oldest credit accounts hurts your average account age.
Not Monitoring
Problems you don't know about can't be fixed.
Expecting Instant Results
Credit building is a marathon, not a sprint.
Using SubPaid for Credit Building
Good payment practices on both sides — paying suppliers on time and getting paid by customers on time — strengthen your business.
SubPaid helps by:
Healthy cash flow makes it easier to maintain the on-time payment record that builds credit.
Frequently Asked Questions
Can I build business credit with bad personal credit?
Yes, but it's harder. Some business credit requires personal guarantees, which brings personal credit into play. Start with accounts that don't require personal guarantees.
How long does negative information stay on business credit?
Typically 3-7 years, depending on the bureau and type of information.
Do all creditors report to business credit bureaus?
No. Many smaller suppliers don't report. Focus on creditors that you know report.
Should I use a credit repair company?
Be cautious. Many legitimate things you can do yourself. Beware of companies that promise quick fixes.
How does business credit affect my bonding?
Surety companies evaluate your overall financial picture, including business credit. Better credit typically means better bonding capacity.