Business credit is built in tiers: Tier 1 is net 30 vendor accounts, Tier 2 adds revolving accounts such as store and fleet cards, and Tier 3 is business credit cards, lines of credit, and SBA loans. Each tier has its own kind of account and its own rough bar to clear, and each sets you up for the next. Go in order and the process is fairly predictable. Jump ahead and you mostly collect denials.
Someone forms an LLC, gets a DUNS number, and applies straight for a business credit card. Denied. Or approved for a small limit with a personal guarantee attached. They conclude business credit is a scam, or only works for people who already have money. Usually they just skipped about six months of steps.
Where the tiers come from
The tiers are not an official system. You will not find the words "Tier 1" on Dun & Bradstreet's website. They are shorthand people use to describe how credit actually gets extended to a new business.
Every lender and vendor is asking one question: if I give this business credit, will I be paid back? With a brand-new business they have nothing to go on: no file, no history, no score. So the first to take a chance are the ones risking the least, such as a supply company shipping packing tape on 30-day terms. Pay on time and the payment lands on your file. Now the next lender has something to look at. A few more on-time payments and a slightly larger lender takes a slightly larger risk. Each tier is a bigger bet that your track record has earned.
There is also a step before Tier 1: the foundation. Your entity, EIN, DUNS number, business bank account, and the same name, address, and phone everywhere. Without it, nothing you open in Tier 1 will report cleanly. See fundable in 90 days.
| Stage | What is in it | Roughly when | What it shows |
|---|---|---|---|
| Foundation | Entity, EIN, DUNS, business bank account, consistent name, address, and phone | Before day 1 | You are a real, verifiable business |
| Tier 1 | Net 30 vendor accounts that report to the bureaus | Months 1 to 3 | You pay trade bills on time |
| Tier 2 | Store cards, fleet cards, larger trade lines | Months 3 to 6 | You can handle revolving credit |
| Tier 3 | Business credit cards, lines of credit, SBA loans | Months 6 to 12 and beyond | You are ready for working capital |
These timeframes are typical ranges, not promises.
Tier 1: net 30 vendor accounts
Tier 1 accounts are vendor accounts where you buy supplies, the vendor gives you 30 days to pay, and the vendor reports that payment to one or more business bureaus. The reporting is everything. Many companies offer net 30 terms and never report, and you could pay them perfectly for two years without moving your file.
Open three to five accounts. D&B needs several payment experiences on file before it will generate a PAYDEX score, and you want at least one or two accounts reporting to Experian and Equifax so you are not building on one bureau. What you buy does not much matter. Buy things the business would use anyway, and pay on time or early. For specific vendors, see net 30 vendors that report, and for how scoring works, see net 30 accounts.
PAYDEX runs from 1 to 100 and reflects payment timing: about 100 for payments roughly 30 days early, 90 for about 20 days early, 80 for on time, 70 for about 15 days late, and 50 for about 30 days late. Your Tier 1 target is 80, on time every time. A first score commonly appears 60 to 90 days after the first invoices are paid.
When to move up. There is no official line. A working rule many people use is a PAYDEX near 80, three to six months of on-time history, and files showing at D&B and Experian at a minimum. Vendors do not publish approval thresholds, so treat that as a target, not a promise.
Tier 2: adding revolving credit
Tier 1 is all net 30: an invoice arrives and you pay it in full. Tier 2 brings in revolving credit, where you get a limit, carry a balance that moves around, and pay it down. That is how business credit cards and lines of credit work, so this is the practice run lenders like to see.
| Account type | Examples | What it adds to your file |
|---|---|---|
| Store accounts | Home improvement and office supply retailers' business accounts | Your first revolving accounts under the business |
| Fleet and fuel cards | WEX and similar providers | Revolving credit tied to a real operating expense |
| Larger trade lines | Limit increases from Tier 1 vendors | Higher reported limits and a deeper file |
Some store and fleet accounts check personal credit or require a personal guarantee. Read the terms before you apply. The guarantee requirement loosens gradually as the business file strengthens. It does not disappear on a set date.
Two things matter more here than in Tier 1. First, utilization: keep balances well below the limit. Under 30 percent is a common rule of thumb. Second, keep using your Tier 1 accounts. Moving up does not mean moving out, and those older accounts keep reporting, with their age counting for something. Two or three Tier 2 accounts over months three to six is plenty. See Tier 2 business credit accounts.
Tier 3: cards, credit lines, and SBA loans
Tier 3 is what most people wanted from day one. At this level, lenders look at the whole picture, not just PAYDEX:
- A PAYDEX of 80 or higher with several trade lines reporting
- Active files at all three bureaus with no derogatory marks
- Six to twelve months or more of payment history
- A business bank account with a steady balance and no overdrafts
- Time in business and revenue, which most lenders want
- Your personal credit, for most products at this level
Most business credit cards from the major banks still ask for a personal guarantee, even with a strong business file. Strong business credit gets better approvals and higher limits, but it does not automatically take your name off the account. Cards that skip the guarantee are mostly corporate cards such as Brex and Ramp, which underwrite on your business bank balance and revenue more than a credit score. For lines of credit, online lenders such as Bluevine weigh revenue, time in business, and credit. Requirements change, so check current terms. See business credit cards with no personal guarantee and business line of credit with no revenue.
A note on SBA loans. The SBA formerly screened smaller 7(a) loans with a minimum FICO SBSS score. As of March 1, 2026, it no longer does. For 7(a) Small Loans, which are $350,000 or less, lenders now perform a full commercial credit analysis and look for a debt service coverage ratio of at least 1.1 to 1. SBSS can still be used by a lender internally. Any video or article that still quotes an SBA minimum score is out of date. See PAYDEX vs Intelliscore vs FICO SBSS.
The takeaway for Tier 3: it is not just about business credit anymore. It is the business file, your personal credit, your bank account, and your revenue all at once, which is why the order of everything before it matters.
The full map
| Stage | Timeframe | What should be done | Ready to move up when |
|---|---|---|---|
| Foundation | Before day 1 | LLC, EIN, DUNS, bank account, business phone and address | Name, address, and phone match everywhere |
| Tier 1 | Months 1 to 3 | Three to five reporting net 30 accounts, paid on time or early | PAYDEX is showing, at or near 80 |
| Tier 2 | Months 3 to 6 | Two or three revolving accounts, low utilization, Tier 1 still active | Three to six months of clean history across two or three bureaus |
| Tier 3 | Months 6 to 12 and beyond | Cards, lines of credit, SBA as you qualify | Ongoing: keep every account in good standing |
The timeframes assume you do each step when it is due. Most delays come from the foundation: a DUNS number that took three extra weeks because the address did not match the state filing, for example. Every week lost up front pushes back everything after it. And nothing closes. At month twelve you should still have your first Tier 1 accounts open and reporting, because the age and depth of your oldest accounts help make the file strong.
Five mistakes that stall progress
- Applying for the next tier too early. A Tier 2 lender looking at 45 days of history sees almost nothing. You get denied or get far worse terms than you would three months later. Waiting costs nothing. Denials do.
- Building on one bureau. PAYDEX gets all the attention, so people load up on D&B-only accounts. Then a lender pulls Experian and finds nothing.
- Letting Tier 1 accounts go quiet. No purchases means no new payments to report, and some vendors close idle accounts.
- Forgetting the bank account. By Tier 3, lenders read your bank statements. A strong PAYDEX beside a checking account that hovers near zero with overdrafts sends mixed signals.
- Paying someone to skip the tiers. Tradeline packages, "guaranteed funding" programs, and aged shelf companies all sell the same promise: skipping the time. The tiers are built on time, and nobody can sell you that. See shelf corporations and business credit.