How to Build Business Credit.
Business credit is a critical but often misunderstood tool that can unlock financing, protect your personal credit, and strengthen your small business.
Many small business owners assume business credit “just happens” once they form an LLC, but that’s not how it works.
In this episode, Henry Lopez is joined by Gerri Detweiler, one of the leading experts on small business credit, to break down how business credit really works and why it matters far earlier than most owners realize. They discuss how business credit affects financing, vendor relationships, and even potential partnerships, and why larger companies often check your business credit before working with you.
Gerri explains the fundamentals of establishing business credit, including whether you should start as a sole proprietor or form an LLC, how credit reporting works, and why payment history is the most important factor in building strong business credit scores.
She also shares practical strategies for getting started such as using net-30 vendors, business credit cards, and equipment financing, and how to avoid common mistakes that can quietly damage your credit profile.
“Business credit doesn’t build itself. You have to be intentional about it from day one,” Gerri explains.
Gerri Detweiler has spent more than 30 years helping people make sense of credit and financing, with a special focus on helping small business owners. As an Education Consultant for Nav, she guides entrepreneurs in building strong business credit and understanding how it can open doors for growth. Gerri has answered thousands of credit questions online, written or coauthored six books, including Finance Your Own Business: Get on the Financing Fast Track, and has been interviewed in thousands of media stories as a trusted credit expert. Through her widely syndicated articles, webinars for organizations like SCORE and Small Business Development Centers, as well as educational videos, she makes complex financial topics clear and practical, empowering business owners to take control of their credit and grow healthier companies.
Question: How do you build business credit as a small business owner?
Answer: Business credit is built by establishing accounts that report to business credit bureaus, such as net-30 vendors, business credit cards, and loans, and consistently paying on time, as payment history is the most important factor.
Question: Does forming an LLC automatically create business credit?
Answer: No. Forming an LLC or corporation does not automatically create business credit; you must actively establish and manage accounts that report under your business name or EIN.
Question: Can sole proprietors build business credit?
Answer: Yes, sole proprietors can begin building business credit, but transitioning to an LLC or corporation later may require updating accounts and records to reflect the new business entity.
Question: Why is monitoring business credit important?
Answer: Monitoring business credit helps prevent identity theft, detect unauthorized liens or UCC filings, and ensure your credit profile is accurate before applying for financing or partnerships.
Episode Host: Henry Lopez is a serial entrepreneur, small business coach, and the host of The How of Business podcast show – dedicated to helping you start, run, grow and exit your small business.
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Sponsor:
This episode of The How of Business podcast is sponsored by BoxHero.
Running a business means keeping track of a lot of moving pieces – and when your inventory isn’t organized, it can cost you valuable time and money. Maybe you’ve oversold a product that wasn’t actually in stock, or you’re guessing at reorder quantities because your spreadsheets are out of date.
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Henry Lopez invites you to try BoxHero free for 30 days – with no credit card required – and see for yourself why BoxHero is the simplest solution for small businesses to track, manage, and organize inventory. Just visit boxhero.io and sign up for a free account.
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We have received compensation from this sponsor partner. We only accept sponsorships from companies who we believe provide products and services that are valuable for small business owners.