How to Build Business Credit in Canada

Build business credit by legally and financially separating your business from your personal finances, then opening accounts that actually report to a business credit bureau, such as a business credit card, supplier trade terms, or a small loan.

Paying every one of those on time is what builds the file. It works the same way personal credit does, just tracked under your business instead of you.

KOHO Credit Builder

KOHO Credit Builder is designed to help Canadians establish or build their credit history through consistent monthly payments, without relying on a traditional credit card.

With KOHO Credit Builder, you can:

• +74 points average credit score increase seen using our credit building tools*
• Get approved without a hard credit check or minimum deposit
• Pay no interest on the line of credit
• Track your credit score and credit report directly in the KOHO app
• Build your credit history with monthly payments reported to the credit bureaus

Why Business Credit Is Separate From Your Personal Credit

Personal credit is tracked by Equifax and TransUnion under your own name. Business credit is tracked separately, mainly by Equifax Canada's commercial division and Dun & Bradstreet, under your business's own identity.

If you're a sole proprietor, your business usually isn't a distinct legal entity, so lenders often look at your personal credit regardless. Incorporating gives your business its own legal identity and its own Business Number from the CRA, which is what lets it build a credit file apart from yours.

Step 1: Set Up Your Business as Its Own Entity

Register or incorporate your business and get your Business Number from the CRA.

Open a business bank account that's completely separate from your personal accounts, and run every business expense and payment through it.

This separation isn't just good bookkeeping. It's what makes a lender or bureau treat your business as its own credit-worthy entity instead of an extension of you.

Step 2: Open Accounts That Actually Report

A few accounts commonly build a business credit file:

• A D-U-N-S Number. Dun & Bradstreet uses this unique identifier to create your business's commercial credit file. You can request one directly from D&B at no cost.
• A business credit card, used for regular expenses and paid off consistently.
• Supplier trade credit, such as net-30 payment terms. Many suppliers report your payment history to a commercial bureau.
• A small business loan or line of credit. The Business Development Bank of Canada (BDC), a federal Crown corporation, lends directly to businesses, with general financing starting around $150,000 and faster online options up to $350,000 for a specific project.

Step 3: Use Credit the Way That Builds a Strong File

Once the accounts are open, how you use them matters more than how many you have.

Pay every bill on time. Payment history carries the same weight for business credit that it does for personal credit.

Keep your balances low relative to your limits, and avoid applying for several types of credit all at once. Spacing out applications gives each one time to show a track record before you add the next.

Common Mistakes That Slow You Down

A few habits undo the progress you're trying to build:

• Mixing personal and business expenses. This blurs the separation that makes business credit distinct in the first place.
• Skipping registration. Without a Business Number, there's no clear entity for a bureau to build a file around.
• Missing supplier payment terms. A late trade account can hurt your file the same way a late loan payment would.
• Never checking your business credit report. Errors on a commercial report are at least as common as on a personal one, and they're easy to miss if you never look.

*Based on users with a starting score of 450 or under and who used all of our credit building tools (i.e. Credit Building, Secured Credit Building) for 12+ months with on time payments. Credit building tools we offer are not a credit repair tool and does not guarantee an improvement in credit score. Credit scores are based on complex models involving a variety of factors. Consistent on-time payments help improve scores and missed or late payments may cause credit scores to decrease. Outcomes may vary among users.