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Updated: Jan 26, 2022

There is a right way to apply for credit, and about a million wrong ways. Most small business owners, especially those just starting out, don’t understand that applying for credit in the company name is very different than applying for personal credit. Lenders factor in the business age, size, industry, and previous payment history when considering risk assigned to your business.

What’s tripping up your business credit application process?

Applications for business credit are not processed the same way as personal credit applications. There are a vast array of factors that lenders need to take into consideration when making business credit approval decisions that would never be included in personal credit decisions, such as:

  • What is the legal structure of the business?

  • How long has this business been operating?

  • How many employees does this business support?

  • Do we know who the principles are?

  • Do we have accurate data on this company?

  • Has anyone else ever extended them credit?

  • What is the highest credit they have been responsible for?

  • How much have they had in outstanding credit at any given time?

  • Has any of this credit been revolving credit, paid over time?

  • Does this company pay its bills on time?

To make an informed decision about whether or not your company can be approved or how much you can safely be responsible to pay back, banks, credit card underwriters, and other lenders or creditors rely on commercial credit bureaus like Dun & Bradstreet, Business Experian and Equifax for Business to provide an accurate and reliable report on these factors and more, saving the lender countless hours of research and data validation. In turn, those bureaus rely on their trusted data sources, as well as the business principles, to provide the bulk of the data they will put into the report. Better data translates to strong credit limit recommendations.


1. If you want business credit, you need to have a business credit profile established with all three bureaus. If your business credit report is not complete, you will be required to back up your purchases with a personal guarantee that is reliant on your personal credit scores and ability to pay. Credit that is personally guaranteed typically will only report to your personal credit file and will not likely ever report to D&B as business credit, therefore it is not helping you to achieve more business credit as you move forward.

2. Have your commercial credit report in the best possible position before lenders see it for the first time. Since a denial on a credit application could prevent you from re-applying for six months, it is crucial that all of the data elements be present in your report prior to sending out your applications and getting immediate approvals. Unlike taking a driver’s license test, “do-over’s” can’t happen for 6-to-12 months. Make sure your business credit profile is carefully prepared before you apply for credit.

3. Meet the minimum requirements of Net 30 accounts versus COD or cash accounts. COD, Cash, and Point of Sale transactions do not help you achieve credit and can even negatively impact your credit limit recommendations and ability to get credit at all. Some lenders may set a specific prerequisite for how many credit experiences have to be in the D&B profile, and each lender may have a different standard. Make sure you have as many payment experiences as possible on file to get the best approvals.

4. Meet the minimum requirements for the types of vendors represented in your D&B report; i.e. auto-reporting vendors versus manually-verified vendors. If your only payment experiences are companies typically listed in online searches as “known to provide Net30 accounts” it is a dead giveaway of what you are trying to accomplish. Your D&B scores, risk ratings, and credit limit recommendations will reflect that. It’s okay to use those companies as a beginning step to building business credit, but they should be interspersed with a variety of manually-verified vendors, as well.

5. Meet the minimum requirements of Revolving credit versus Net terms credit in your D&B report. With revolving credit, you are paying for your purchases over time, such as buying a printer and making small payments over the next six months. Net terms credit is an invoice you receive that has to be paid in full within a set period of days, such as Net30, Net15, or Net10.

6. One of the biggest deterrents to getting a credit approval is knowing WHEN to apply. Oftentimes, small business owners think they can apply as soon as they get their 80 Paydex score and do not understand the whole approval process. Readiness for great credit approvals is like lining up all the planets in a single row, or putting the last piece of a puzzle into place. It has to be done at the right time, when ALL of the elements are in place, and reflecting ONLY positive light on your business.

7. Make no mistake. HOW to apply is equally important as WHEN to apply. It is best to submit your application either online or in the store. The risk for failure is too high when submitting applications over the phone. Human error or failure to provide full disclosure of information can keep you from getting to your goals.

8. The fastest way to doom yourself to failure is to immediately submit multiple applications to many companies all at once. For instance, if you are looking to get a bank line of credit for a vehicle purchase, you would normally apply to a specific bank and wait for an approval. If you get that approval, there is no reason to go applying anywhere else, right? Every application you submit in your business name has the potential to generate 3 inquiries on your business credit profile. If you suddenly apply for credit at fifteen different banks, there is potential for forty-five immediate inquiries on your profile. A sudden increase in inquiries is a sure sign of desperation, and desperation is a sign of increased risk.

9. If you are trying to build solid business credit (as opposed to just trying to rip off unsuspecting creditors) you will apply for different types of credit to build a well-rounded D&B profile that includes a variety of creditors, a variety of credit types, a variety of credit terms, and a variety of inquiry histories. Practice solid techniques to ensure you move at a steady, confident, and responsible pace, where every piece of achieved credit helps you to build additional credit and limit the risk to your business.

10. Understand how your personal credit report will impact your ability to achieve business credit. Lenders are required to verify the applicant’s identity by running a personal credit report. While a solid D&B profile can help you to establish unsecured (non-PG) credit, there are specific variables that cannot be overlooked, such as recent personal bankruptcy, liens, lawsuits, and charge-offs on certain types of debt.

11. Use your credit responsibly. Just as creditors pulled your D&B report to make a decision, they will also report back to D&B and the other bureaus about your payment habits. Positive payment habits will help you to grow and achieve higher approvals and a more varied profile. Negative payment habits will lower your Paydex score, raise your risk ratings, and downgrade your potential for increasing credit approvals.

LESSON: This blog post addresses most of the requirements and most of the variables, but you will still need to use common sense when applying for business credit. With responsible behavior, you can achieve multiple levels of credit and learn how to successfully manage your business credit profile ongoing into the future.

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