Business Credit USA: how your company gets its own credit file

In America, it's not just people who have a credit file. Every company has one too. A new company starts from zero, even if its owners have been successful at home for decades. Here you'll learn who keeps your company's file, what goes into it, which scores vendors and card issuers read from it, and why your personal credit still counts at the start.

1Two credit files: yours and your company's

In much of Europe, people mainly know credit bureaus as the place that checks a prospective tenant or borrower. In America, the system is denser and has two levels. On one level is you as a person, with your credit file at the three nationwide credit bureaus and your FICO score. On the other is your company, with its own file at business credit bureaus and its own scores.

Day to day, this second file is called business credit. It helps decide whether a vendor will ship to your company on invoice, what limit a business card gets and how a bank views a credit line. And it has one feature many founders from Europe underestimate: a new US company starts from zero. It makes no difference that its parent company back home has paid on time for thirty years, or that you have a spotless credit record at home. To the American credit bureaus, your company is a blank page on day one.

The table below puts both files side by side. In the sections that follow, we walk through who keeps your company's file, how it's created, what goes into it and why your personal history still counts at the start.

2Who keeps your company's file

There are several business credit bureaus in the USA. The Small Business Administration, the federal agency for small and mid-sized businesses, names Dun & Bradstreet, Experian and Equifax in its guide as the places where you can request your company's report. You know two of these names from personal credit, but the company files are separate databases with their own scores.

An article on the SBA website describes where the bureaus get their data: payment data from banks and lenders, public records such as formation and lien filings, business directories and, above all, vendor reports on how their customers pay. The key point: a file doesn't fill itself. Until someone reports how your company pays, it stays incomplete.

For you, that means two things. First, it pays to check early whether your company already has an entry and whether it's accurate. Second, you should deliberately work with partners who report to the bureaus, because only their payments build the file. Far from every vendor and every bank reports.

3The foundation: company, EIN and account

Before your company can have a credit file, it has to exist as a separate legal person. Business credit requires an entity that is separate from you, such as an LLC or a corporation. As a sole proprietor without a company, you are simply yourself as far as the system is concerned.

The second building block is the EIN, your company's tax number with the IRS. The SBA article lists it as a step that comes before the credit file. The IRS issues it free of charge. You can only apply online if your company has its principal place of business in the USA and its responsible party has an SSN or ITIN; otherwise the application goes by phone, fax or mail. The IRS advises forming the company with the state before applying for the EIN, as the application may otherwise be delayed.

The third building block is a business account in the company's name. To open it, the bank must identify your company's beneficial owners under 31 CFR 1010.230: every person holding 25 percent or more of the ownership and one person with significant management responsibility. Having its own account is also what makes your company's payments visible as its payments in the first place. If you run business expenses through your personal account, you build no business credit.

4The D-U-N-S number: getting on the register

The usual first step toward your company's credit file is a D-U-N-S number from Dun & Bradstreet. The SBA explicitly names it in its guide as one of the first steps. It's a nine-digit identifier that Dun & Bradstreet issues only to businesses, one for each physical location of your company. With it, you effectively open the file at Dun & Bradstreet to which payment experiences are later attached.

The number is free. Dun & Bradstreet quotes up to 30 business days for standard issuance and offers faster issuance for a fee, which you don't need. The number never expires and never changes, even if your company is later sold or closed, and you don't have to buy any product to get or keep it. So you can read offers that sell you the number with a calm mind.

A D-U-N-S number on its own doesn't move any score. It's the address where your company can be found. What's in the file depends on who reports to it.

5The Paydex and what it measures

The best-known score in the Dun & Bradstreet file is the Paydex. It measures one thing only: how promptly your company pays its bills. It's based on payment experiences that vendors report to Dun & Bradstreet through a trade exchange program, weighted by invoice amount. So larger invoices count more than small ones.

The scale runs from 1 to 100. A Paydex of 80 means the reported payments generally arrived within the agreed terms. Scores above 80 indicate payment before the due date, scores below indicate late payment; the table shows how Dun & Bradstreet reads the levels. Only experiences reported within the last 24 months count toward the calculation.

This leads to a practical rule that feels unfamiliar to Europeans. Paying an invoice with 30-day terms on day one costs you nothing; quite the opposite: for the Paydex, early payment beats on-time payment. Besides the Paydex, Dun & Bradstreet keeps other scores, for example on the likelihood of late payment or financial distress. Experian and Equifax also keep files on companies, and their assessments follow their own rules.

6Vendor credit: invoices that count

The classic way to fill a company file is vendor credit. Your vendor delivers and gives you payment terms, often 30 days, known in everyday American business as Net 30. If the vendor reports your payment behavior to a business credit bureau, every invoice creates an entry. The SBA article advises deliberately working with vendors who extend credit to your company and report it, because that is exactly what opens the file and builds the score.

Keep a few things in mind. Before the first order, ask which bureau a vendor reports to; an account that isn't reported anywhere doesn't help your file. Only use vendor credit for things your company really needs. And pay early, because a single late payment weighs heavily in a thin file.

Vendor credit has a practical advantage: it comes from purchases your company makes anyway. That's why, in the first months, it's often the obvious route to your first entries, even before a bank considers a card or credit line.

7Business cards and the personal guarantee

The next step up is business credit cards. This is where founders from Europe are often surprised, because with a new company many issuers look at you first. The SBA puts it plainly: for a new company, creditworthiness typically depends on the owner's personal credit score. If you have no personal credit history in the US, your company will often get no card or only a small one, no matter how strong the company is.

Then there is the personal guarantee. With it, you personally stand behind your company's card debt. Legally, a business card is treated differently from your personal one anyway: the consumer protection rules of Regulation Z generally do not apply to credit used primarily for business purposes. So read the guarantee and the agreement carefully.

There are exceptions. According to Mercury, its IO card is issued without a personal guarantee and without a check of your personal credit history; access and limits are based on your company's balances at Mercury. Mercury also says it reports IO card payments to Experian, Equifax and Dun & Bradstreet. Whether your company gets the card is Mercury's decision, based on its own review.

8Bank loans and the limits of the SBA

The top tier is the bank loan or line of credit. Here a bank looks beyond the file at the whole picture: account activity, business model, substance in the US and the people behind it. How the conversation with a US bank about a line of credit works is covered in our article A line of credit for your US company.

One route is closed to companies with European owners: SBA-guaranteed loans. For its best-known programs, 7(a) and 504, the SBA has excluded any company owned wholly or partly by foreign nationals, and owners applying for an SBA loan must be US citizens or US nationals whose primary residence is in the US. Even where SBA loans are available, they usually require a personal guarantee from everyone who owns at least 20 percent. For your planning, this means credit for your US company comes from private sources, and they look all the more closely at the file, the account and the owners.

9The order that works

All of this adds up to a clear order. First, you establish yourself in the American system: with a number, an account and cards in your name that report to all three national credit bureaus. Our guide to US bank accounts and US credit shows how to do that without an SSN. At the same time, your company gets its foundation: entity, EIN, business account and D-U-N-S number.

Next, you build your company's file with payments that get reported: supplier credit, a first business card that reports to the business credit bureaus, invoices paid early. Only once both files have substance do the big cards and lines of credit come within reach. Nobody can promise you approval, because the issuer or bank decides on every application. But if you follow the order, you apply at a point when there is something to review.

In short

• Your US company has its own credit file with business credit bureaus such as Dun & Bradstreet, Experian and Equifax, separate from your personal one.
• The D-U-N-S number is free, nine digits long and the usual first step; it can take up to 30 business days to be issued.
• The Paydex runs from 1 to 100; 80 means on-time payment. It is built from payments that suppliers report.
• For a new company, lenders usually check the owners' personal credit and often require a personal guarantee.
• SBA-backed loans are not open to companies with foreign owners.

How we help you

• Credit BuilderCredit for your company and for you, built step by step.
• US Bank Account OpeningYour own access to the American financial system, even without an SSN.
• Apply for an EINYour company's US tax ID, applied for by us.
• Company formation consultationEntity type, state and tax consequences, before you commit.