The conventional enterprise credit evaluation method is mainly financial evaluation, and the credit evaluation indicators are not perfect. Therefore, a credit evaluation method for tobacco retail enterprises based on hierarchical clustering algorithm is designed. Select tobacco retail enterprise credit evaluation indicators to measure enterprise credit indicators in all aspects. Based on the hierarchical clustering algorithm, the credit evaluation index system of retail enterprises is constructed to determine the importance of each evaluation index and reflect the contribution of this index, so as to achieve effective credit evaluation of tobacco retail enterprises. The example analysis verifies that the evaluation method is more accurate and can be applied in real life.