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How to Get an Initial Business Credit Profile and Score

Learn how to build am intial business credit profile and score.

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How to Get an Initial Business Credit Profile and Score

  1. 1. How to Build an Initial Business Credit Profile and Score
  2. 2. Ty Crandall Director of Business Services (877) 600-2487
  3. 3. •
  4. 4. Business Credit • Business Credit is credit that is obtained in a Business Name • With business credit the Business builds its own credit profile and credit score • With an established credit profile and score, the business will then qualify for credit
  5. 5. Business Credit • This credit is in the business name and based on the business’s ability to pay, not the business owners • Since the business qualifies for the credit, in some cases there is no personal credit check required from the business owner
  6. 6. Business Credit • The business can use its credit to qualify for revolving store credit cards like Staples, Lowes, Sam’s Club, Costco, BP, Wal-Mart, even MasterCard, Visa, and AMEX • The business can also qualify for credit lines and loans
  7. 7. Business Credit Benefits • A credit profile can be built for a business that is completely separate from the business owner’s personal credit profile • This gives business owners DOUBLE the borrowing power as they have both Personal and Business credit profiles built
  8. 8. Business Credit Benefits • Business credit scores are based only on whether the business pays its bills on time • A business owner can obtain credit much faster using their business credit profile versus their personal credit profile.
  9. 9. Business Credit Benefits • Approval limits are much higher on business accounts versus personal accounts • Per SBA, credit limits on business cards are usually 10-100 times higher than consumer credit
  10. 10. Business Credit Benefits • When done correctly Business Credit can be built without a personal credit check • Business credit can quickly be obtained regardless of personal credit quality
  11. 11. Business Credit Benefits • Most business credit can be obtained without the owner taking on personal liability, or a personal guarantee • This means in case of default, the business owner’s personal assets can’t be pursued
  12. 12. Business Credit Benefits • When a business owner applies for financing, their business credit IS reviewed • Not having business credit established will get an owner DECLINED for financing • There are no regulations that require the lenders notify the business owner for their reason for denial, so most never know
  13. 13. Business Credit Building – The business starts with no credit profile – The business gets approved for new credit that reports to the business credit reporting agencies – The business uses the credit and pays the bill timely – A positive business credit profile is established – As the business continues using the credit and pays bills timely it will qualify for more credit A business starts building a brand new credit profile much the same as a consumer does
  14. 14. Step 1- Build Business Credibility • The perception lenders, vendors, and creditors have of your business is critical to your ability to build strong business credit. • Before applying for business credit a business must insure it meets or exceeds all lender credibility standards
  15. 15. Business Name • It is very important that you use your exact business legal name • Your full business name should include any recorded DBA filing you will be using • Insure your business name is exactly the same on your corporation papers, licenses, and bank statements
  16. 16. VERY Important • File your corporation and get your EIN • Get your phone listed with 411 (List Yourself) • These two items are ESSENTIAL to get approved for initial business credit
  17. 17. Business Address • Business Address –Must be a real brick-and-mortar building –Deliverable physical address –Cannot be a home address –Cannot be a PO Box –Cannot be a UPS address • Some lenders will not approve and fund unless this criteria is met
  18. 18. Perception is EVERYTHING • You should have a toll free phone number • You should have a fax number • You need a professional email address, like • You should have a nice looking, professional website
  19. 19. Bank Account • Having a high account balance is essential in obtaining an excellent Bank Rating • Having a good Bank Rating is essential for approval • Try to keep a bank balance of $10,000 or higher for a High 5 Bank Rating
  20. 20. Licensing • Insure you have proper licenses – State – City – County • Make sure your address is correct on all licenses
  21. 21. Business Listings • Take the time to verify that main agencies (State, IRS, Bank, and 411 national directory) have your business listed the same way and with your Exact Legal Name.
  22. 22. Business Credit Reports • It’s an exceptional idea to pull your reports with D&B and Experian to check your trade lines, score, and profile BEFORE applying • Trying to get approved with existing bad credit presents unique, additional approval challenges • Review your report and dispute derogatory items first BEFORE applying for initial credit
  23. 23. Step 2- Obtain Business Credit Reports • Use Creditera • Here’s our link with a BIG discount • $29.99 monthly • Get D&B and Experian Business • AND get Transunion and Experian personal • EXCLUSIVE spot for Business FICO score
  24. 24. • ybusiness?clickid=wcATkAxMp3UsyV%3Azy %3ATWX2yqUkTSui1pQxeYxY0&iradid=12822 4&irpid=79346&iradtype=TEXT_LINK&iradsize =&irmpname=Business+Finance+Suite&irmpty pe=mediapartner&utm_source=Partner&utm _campaign=79346
  25. 25. Step 3- Obtain Vendor Accounts FIRST • A business credit report can be started much the same as a consumer report commonly is, with small credit cards • The business can be approved for small credit cards to help them build an initial credit profile • These types of initial cards in the business world are commonly referred to as “vendor credit”
  26. 26. Vendor Accounts • A vendor line of credit is when a company (vendor) extends a line of credit to your business on "Net 15, 30, 60 or 90" day terms. • This means that you can purchase their products or services up to a maximum dollar amount and you have 15, 30, 60 or 90 days to pay the bill in full. • So if you're set-up on Net 30 terms and were to purchase $300 worth of goods today, then that $300 is due within the next 30 days.
  27. 27. Vendor Accounts • You can get products and services for your business needs and defer the payment on those for 30 days, thereby easing cash flow • And some vendors will approve your company for Net 30 payment terms upon verification of as little as an EIN number and 411 listing
  28. 28. Do NOT Apply Using Your SSN • Always apply first without using your SSN. • Some vendors will request it and some will even tell you on the phone they need to have it, but submit first without it • Many don’t even know you can get approved without it
  29. 29. Do NOT Apply Using Your SSN • When you apply using your SSN you almost always are giving a personal guarantee • One easy way to know if you have business credit already is if you obtained credit without signing for it and providing your SSN • TRUE business credit doesn’t require a SSN in most cases to qualify
  30. 30. Do NOT Apply Using Your SSN • Business credit is using your EIN to qualify for credit • When you have enough credit built for your EIN, you can then get approved without providing your SSN • If you provide a SSN, your personal credit WILL be pulled in most cases • That personal credit will then be used for the approval decision
  31. 31. Do NOT Apply Using Your SSN • Most credit issuers will approve you without your SSN if your EIN credit is strong enough • If your EIN credit is not good enough, you might be declined and they then might ask for your SSN • No matter what ANY credit representatives tell you, credit CAN be obtained based on your EIN only
  32. 32. STARTER Vendor Accounts • You must start a business credit profile and score with starter vendors • Starter vendors are ones who will give you initial credit even if you have no credit, no score, or no trade lines now • Most stores like Staples will NOT give you initial starter credit, so DON’T even try applying
  33. 33. True STARTER Vendors • Laughlin Associates • Deal with corporate setup and compliance • Report to Experian • Only 411 listing and EIN required • Reports in 30-60 days • Net 30 Terms
  34. 34. True STARTER Vendors • Creditera • Business and personal credit monitoring • Report to Experian and D&B • NO approval requirements • Reports in 180 days • Net 30 Terms
  35. 35. True STARTER Vendors • Quill Office Supplies • Office, packaging, and cleaning supplies • Report to D&B • Must place initial order first unless D&B score is established – Usually they’ll put you on a 90 day prepayment schedule – If you order items each month for 3 months, they typically approve you for a Net 30 Account
  36. 36. True STARTER Vendors • Gempler’s • Work supplies and products • Report to D&B • Place initial order over $50 and select “Invoice me” option – They will pull credit – If not approved, pre-pay for order and keep purchasing and choosing “invoice me” option until approved for Net 30 account
  37. 37. True STARTER Vendors • Reliable Office Supplies • Office supplies and promotional products • Report to D&B, Experian and Equifax • Place initial order, then request your order be invoiced or billed to your company – They will pull your credit – If not approved, keep ordering and requesting to be invoiced or billed – The more orders you place the better your chance of approval for Net 30 terms
  38. 38. True STARTER Vendors • Uline Shipping Supplies • Shipping, packing, and industrial supplies • Report to D&B • You must have your DUNS number • They will ask for 2 references and bank reference • First few orders might need to be pre-paid to initially get approved for Net 30 terms
  39. 39. True STARTER Vendors • Monopolize Your Marketplace • Everything you need to know about marketing and business 10 audio CD set • Report to Experian • TRUE starter account • Upon check out choose “4 equal payments of $59.99” option • First charge takes place in 30 days • Need bank account, EIN, deliverable address • 30-60 days for reporting
  40. 40. Vendor Accounts • You need to have a total of at least five 5 payment experiences to start getting revolving store credit • A payment experience is the reporting of an account to 1 business credit reporting agency • An account reported to both D&B and Experian would count as 2 payment experiences
  41. 41. Vendor Accounts • Pay your Net 30 vendor accounts in-full and on-time • You must be patient and allow time for the vendors' reporting cycles to get into the reporting systems • It typically takes 3 cycles of "Net" accounts reporting to build credit scores
  42. 42. Vendor Accounts • Most Merchants and major retailers do offer business credit, they just don’t advertise it • There is no benefit to the merchant to promote credit with no personal liability if the business owner is willing to take on that liability • So they don’t promote their business credit cards and regularly ask for a SSN
  43. 43. Obtain Revolving Accounts • After 5 trade lines are established using vendor accounts, obtaining revolving accounts is the next step • Revolving accounts are cards a business owner can use and not be required to pay the full balance owed each month
  44. 44. Obtain Revolving Accounts • Revolving account approvals will begin coming from stores • Store revolving credit must be obtained before the business owner starts getting Visa, MC, Amex, type cards
  45. 45. Obtain Revolving Accounts • Most stores will NOT approve a business owner for business credit unless the owner has an established credit profile and score, just like in the consumer world • Vendor accounts must be used first to establish a profile and score, then store credit can be obtained • It usually takes only 90 days or less to establish a score and profile with trade lines
  46. 46. Learn more about business credit at Ty Crandall 877-600-2487