Use a Business Credit Card to Establish Business Credit

If you are serious about your business as a separate entity that needs to do business on its own, you need to establish business credit.

One of the most effective ways to establish a credit history of any kind is to have a business card that can be used to make purchases and help your business establish a measure of financial credibility.

Establishing Business Credit

Before you get a credit card, it helps to take a few preliminary steps:

  1. Set up a business entity: You need to decide what organization your business will have, as well as register with the proper authorities in your state.
  2. Get your EIN: The Employer Identification Number is the way the IRS keeps up with your business.  If you want your business to be a truly separate entity, you need an EIN – even if you don’t plan to hire anyone else.
  3. Open a business bank account: Once you have your business proper licensed, and once you have an EIN, you should be able to open a business account at a bank or credit union.  Open your account, and use it show that you have solid cash flow.
  4. Sign up with business credit bureaus: Next, sign up with business credit bureaus that will track your activity.  Dun & Bradstreet is a major business credit bureau.  You can ask those you do business with to report using the DUNS number issued by D&B.

Now that you have taken preliminary steps begin establishing your business credit, it’s time to get a business card.

Apply for a Business Credit Card

establishing business credit

A business credit card is one way you can help build up and establish your business credit.

Realize that, if your business doesn’t have much credit established at all, you might have to rely to some degree on your personal credit.

However, the goal should be to get a credit card in your business name.

Some banks and credit unions can help you with this, getting you a credit card with a low limit to start, and then allowing you to work up to bigger limits.  Talk about you options with your bank, and find out what you need to do.

A business credit card can be one of the fastest and easiest ways to establish credit for your business.  As you make purchases with your credit card, and then pay them off, you will show that your business can handle the expenses, and that it is capable of more.  Your credit will increase, and you will be more likely to be approved for business loans down the road.  As with anytime you use a credit card, make sure that you can pay it off in a reasonable amount of time, and that you at the very least pay the minimum balance on time each month.  Your business credit can be destroyed if you aren’t careful about how you use your business credit card.


It is important, though, to be careful about your business purchases.

Your business credit card should only be used for business purchases, and not for personal purchases.  You want to keep your business and personal expenses separate, for your own protection, and because it makes things easier come tax time.

A business credit card can be a great help and convenience to a small business owner.  But as with any credit you need to be careful and use it well.  Make sure you protect and build your business credit.  You never know when you may need it.



Published or updated August 21, 2012.

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