Business Credit 101 for Contractors and Small Business Owners

Business credit is a record of how your company pays its bills, kept by business credit bureaus under your business name and tax ID. Lenders, suppliers and some insurers can check it when you apply.

Your personal credit tracks you as a person. Business credit tracks the company. Many contractors start with only personal credit, so every truck loan and supply account sits on their own file. A business file gives the company its own history over time. Lenders may still look at your personal credit, especially for a young business, so keep both in good shape.

A separate business entity and an EIN are the usual starting points, because business bureaus build files around a registered company and its tax ID. A sole proprietor can get an EIN, but the business and the owner are legally the same person.

In California you form an LLC or corporation with the Secretary of State. Talk to a CPA or attorney about which structure fits your taxes and liability, because that choice is bigger than credit. Then apply for an EIN. The IRS says you can get one online directly from the IRS in minutes for free, and it warns, beware of websites that charge for an EIN. Use the same legal name and address on your CSLB license, bank account, website and listings.

A DUNS number is a nine digit ID that Dun and Bradstreet uses to create your business credit file. Dun and Bradstreet says there is no cost to request and receive one.

Request it on the Dun and Bradstreet website. The company says normal processing can take up to 30 business days and offers a paid expedited option. The free route works fine if you plan ahead. Many government contracts and some large suppliers also ask for a DUNS number, so it is useful beyond credit.

The three main business bureaus are Dun and Bradstreet, Experian and Equifax. Each collects different data, so your files may not match.

Each one uses its own scores. According to a Chase guide to business credit scores, D&B PAYDEX runs from 1 to 100, Experian Intelliscore Plus runs from 300 to 850, and Equifax offers a payment index from 1 to 100 plus risk scores. FICO's Small Business Scoring Service, or SBSS, runs from 0 to 300 and may be used by lenders. Higher PAYDEX and Intelliscore numbers point to better payment history or lower risk.

Vendor accounts help only when the vendor reports your on time payments to a business bureau. Many supply houses, fuel card programs and office suppliers offer net 30 terms, but not all of them report.

Before you open an account, ask the vendor which bureaus they report to and how often. Buy what your business actually needs, then pay on or before the due date. Do not open accounts just to stack trade lines. A few real accounts paid on time over months tell a better story than many unused ones.

Run every business dollar through a business bank account and business cards, and keep personal spending out of them. Separation keeps your records clean and makes your business file easier to read.

Open a business checking account with your EIN and formation documents. Pay yourself with a transfer, not by swiping the business card for groceries. Use a business phone number, email and address that match across your bank, bureaus, CSLB record and Google Business Profile. Keep simple monthly books. Clean records help at tax time and whenever a lender or bonding company asks for statements.

Check your business files directly with Dun and Bradstreet, Experian and Equifax, and check your personal reports through AnnualCreditReport.com. Review each one for errors.

Each business bureau offers ways to see your file, with free and paid options that change over time, so check their sites. Look for the wrong address, accounts that are not yours, or late payments you know were on time. The FTC says federal law gives you the right to have errors on your personal reports corrected, and that anything a credit repair company can do, you can do for yourself for little or no cost. Business bureaus have their own update and dispute processes on their sites.

Walk away from anyone who wants payment before doing any work, promises a new credit identity, or tells you to use an EIN in place of your Social Security number. The FTC calls these warning signs.

In a December 29, 2025 consumer alert, the FTC warned that scammers insist you pay them before they help you, and promise to create a new credit identity or remove accurate information. An earlier FTC release warned against advice to use an Employer Identification Number in place of a Social Security number, and said following it could lead to fraud charges. Be wary of guaranteed approvals, instant business credit lines with no review, and pressure to act today.

If you want to keep learning at your own pace, WebSEO.pro offers free DIY lessons on personal credit, business credit and funding in the free Funding Journey app. We are not a lender and we do not offer credit repair. Nothing in this guide promises approval or a change to any score, and it is not legal or financial advice. Many Chula Vista and San Diego contractors also pair this work with a free visibility audit, since a consistent name, address and website help both lenders and customers find the real business.