How to Build Business Credit and Why it Matters

If you're a small business owner in Chicago, you already know how important it is to build relationships - with your customers, your community, and yes, even your bank. But there's another relationship that’s often overlooked and absolutely essential to the long-term success of your business: your business credit profile.

Whether you're just getting started or have been operating for years, building strong business credit may unlock critical opportunities for growth, stability, and peace of mind.

What is business credit?

Business credit is a track record of a company’s financial responsibility, much like a personal credit score. It reflects how reliably your business pays its bills, manages debt, and operates financially.

Credit reporting agencies like Dun & Bradstreet®, Experian®, and Equifax® maintain separate business credit profiles for businesses. Lenders, suppliers, landlords, and even potential partners may review this report before deciding to work with or extend credit to your business.

Key differences between personal and business credit

• Business credit is tied to your EIN (Employer Identification Number) rather than your Social Security number
• Your business credit report is public, meaning anyone can request to see it
• A strong business credit profile may help increase your borrowing power without risking your personal credit

Why building business credit matters

1. Access to funding and better loan terms

As a Chicago-based business, whether you're looking to open a second location or upgrade your inventory, funding is often necessary. SBA loans, lines of credit, equipment financing, all may require lenders to assess your financial reliability.

A strong business credit profile may be able to:

• Help you qualify for larger loans
• Secure lower interest rates
• Speed up the approval process
• Allow you to separate business and personal finances more clearly

When you have a solid credit foundation, lenders typically see you as a lower-risk borrower, which may make all the difference during uncertain economic times.

2. Improved relationships with vendors and suppliers

Establishing trade lines with local vendors in Chicago, whether you’re sourcing food from a South Side distributor or partnering with a local print shop in Logan Square, might also be easier when you have a reliable credit history. Suppliers may offer:

• Better payment terms (like net-30 or net-60)
• Higher credit limits
• More flexibility in negotiations

This may help boost your cash flow and free up working capital for daily operations or growth initiatives.

3. Protection for your personal credit

Many small business owners rely heavily on personal credit to start or run their business. But over time, this may pose a risk, especially if your business experiences a downturn.

Building business credit may help:

• Reduce the need for personal guarantees
• Keep business and personal credit profiles separate
• Protect your personal assets if your business faces financial challenges

4. Establishing credibility and legitimacy

In a city as competitive as Chicago, perception matters. A solid business credit profile may signal to potential partners, clients, and investors that your business is stable, trustworthy, and poised for growth.

Being perceived as financially responsible may help open doors and win contracts.

Tips to build business credit

Step 1: Register your business properly

Make sure your business is legally established as an LLC, corporation, or other formal entity. You’ll generally need:

• An EIN (Employer Identification Number) from the IRS
• A business bank account
• Registration with the state of Illinois

Step 2: Open a business bank account

Working with a local financial institution, like Centrust Bank, may give you personalized insights and help you build a relationship with a banking partner that understands your market. A dedicated business account is also typically essential for separating finances and starting your business credit journey.

Step 3: Apply for a D-U-N-S Number

Dun & Bradstreet’s D-U-N-S number is a unique identifier for your business and necessary for building credit with that bureau. It's free to apply and often required by vendors or government contracts.

Step 4: Establish trade lines with suppliers

Start by working with vendors who report payment history to credit bureaus. Pay your bills early or on time. This demonstrates financial responsibility and helps build positive credit.

Step 5: Use a business credit card responsibly

Apply for a business credit card in your company’s name and make small, consistent purchases that you can pay off monthly. This will help build your credit utilization ratio and establish a positive payment history.

Check your credit reports regularly for accuracy and signs of fraud. Tools like Nav®, Dun & Bradstreet, and Experian Business can help you monitor your credit health.

Common mistakes to avoid

• Using only personal credit for business needs. This limits your business's ability to build credit independently.
• Failing to separate business and personal finances. This may complicate your taxes and hurt your credit profile.
• Missing payments or paying vendors late. Even one late payment may negatively impact your credit history.
• Not checking your credit reports. Errors happen. Stay informed and dispute any inaccuracies.

How Centrust Bank may help Chicago businesses build credit

At Centrust Bank, we believe in the power of relationships, especially when it comes to helping local businesses succeed. With decades of experience serving entrepreneurs across Chicagoland, we offer more than just financial products. We provide guidance, partnership, and the tools small businesses need to thrive.

Our business banking team may be able to help you:

• Understand your credit profile
• Get access to credit-building tools like SBA loans and lines of credit
• Create a funding strategy tailored to your goals
• Connect you with local advisors and resources

Credit is a tool, not just a score

Business credit isn’t just about getting a loan, it’s about giving your business a solid foundation. When you build good credit, you're building resilience, flexibility, and credibility. And in a city like Chicago, where competition is fierce and opportunities are everywhere, those advantages matter.