How to Build Business Credit Completely Separate from Personal

Most small business owners make a critical mistake: they use their personal credit to fund their business. The solution is to build a separate business credit profile. Here's how to do it from scratch.

Step 1: Establish Your Business as a Legal Entity

Form an LLC or corporation. This creates legal separation between you and your business — the foundation of separate credit.

Step 2: Get an EIN

An EIN is your business's equivalent of a Social Security Number. Get one free at IRS.gov. Required to open a business bank account and apply for business credit.

Step 3: Open a Business Bank Account

Use only your EIN — not your SSN. Keep all business transactions completely separate from personal finances.

Step 4: Get a D-U-N-S Number

Dun & Bradstreet's D-U-N-S number is required by many lenders. Register free at Dnb.com to build your Paydex score — the business equivalent of FICO.

Step 5: Establish Net-30 Vendor Accounts

Vendors like Uline, Quill, and Grainger offer net-30 terms and report to business credit bureaus. Use them, pay on time, and your Paydex score will build.

Step 6: Get a Business Credit Card

After several months of vendor history, apply for a business credit card that doesn't report to personal bureaus. Keep utilization low and pay on time.