How to Build Credit for your EIN
that is not linked to your Social Security Number today we’re going to
dive in and talk about how you can build your business credit which is credit
that’s linked to your EIN not your social. 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. This credit is in the business
name and based on the businesses 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.
The business can use its credit to qualify for revolving store credit card
like Staple, Lowes, Sam’s Club, Costco, BP, Walmart, even Master Card, Visa, and
American Express, the business can also qualify for credit lines and loans.
Business credit provides you a lot of benefits for one a credit profile can be
built for a business that is completely separate from the business owners
personal credit profile, this gives business owners double the borrowing
power as they have both personal and business credit profile built. Another
benefit of business credit is that 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 plus 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. When
done correctly
business credit can be built without a personal credit check, business credit
can quickly be obtained regardless of personal credit quality, 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 owners personal assets can’t be pursued. Well most business
owners don’t realize is that when you apply for business financing your
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. How
to build credit for your EIN that is not linked to your SSN, a business starts
building a brand new credit profile much the same as a consumer does, 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.
The first step in building business credit is to ensure that your business
is set up credibly in the lenders eyes, 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, there are over 20 credibility
points that are necessary for a business to have a strong credible foundation. It
is very important that you use your exact business legal name on the
application that is listed on all of your company documents, your full
business names should include any recorded DBA filing you will be using,
Insure your business name is is exactly the same on your corporation papers licenses
and bank statements. You can build business credit with almost any
corporate entity type, if you truly want to separate business credit from personal
credit your business must be a separate legal entity not a sole proprietor
or partnership, unless you have a separate business entity corporation or
LLC you might be doing business but you are not truly a business, you need to be
a corporation or an LLC in order to separate personal from business, whether
you have employees or not your business entity must have a federal tax ID
number or EIN just like you have a social security number
your business has an EIN, your tax ID number is used to open your bank account
and built your business credit profile, take the time to verify that all
agencies banks and trade credit vendors have your business listed with the same
tax ID number, ,your business address must be a real brick or mortar building
must be a deliverable physical address it cannot be a home address it cannot be a
PO box, and it cannot be a UPS address, some lenders will not approve and fund
unless this criteria is met.
Business address solutions are available so you don’t need to get an actual
physical address some of these solutions offered from companies like Regus
includes, address only receive mail and packages at your dedicated business address
virtual office professional business address dedicated phone and fax
numbers receptionist services, and part-time use of fully furnished offices
and meeting rooms, and a true office your own full time private office with
receptionist services dedicated phone and fax, internet, full furnishings, meeting
rooms, and more. For business credit approval you must have a dedicated
business phone number that is listed with 411 directory assistance under the
business name lenders, vendors, creditors and even insurance providers will verify
that your business is listed with 411, a toll free number will give your business
credibility but you must have a local business number for the listing with 411
directory assistance. Lenders perceive 800 numbers or toll free phone numbers
as a sign of business credibility, even if you’re a single owner with a home
base business
a toll free number provides the perception that you are in even bigger
company, its incredibility easy and inexpensive to set up a virtual local
phone number or a toll free 800 number. A cell or a home phone number as your main
business line could get you flagged as an un-established business that is too
high of a risk, don’t give a personal cell phone or residential phone as the
business phone number, you can forward a virtual number to any cell or landline
phone number.
Lenders perceive a credible business as one with fax number, as a business you
will need a fax number to receive important documents, you will also need it
to fax in some of your credit applications, you can setup an e-fax that
goes directly to your email.
Credit providers will research your company on the internet, it is best if they
learned everything directly from your company website,
not having a company website will severely hurt their chances of obtaining
business credit, there are many places online that offer affordable business
website so you can have an internet presence that display on overview of
your companies services and contact information. It is important to get a
company email address for your business,
it’s not only professional but greatly helps your chances of getting the thumbs
up from a credit provider. Setting up a business email address is just too easy
and inexpensive to neglect, avoid using free email services like yahoo and
Hotmail, there is nothing worse than credit providers seeing an email address
like partychic2009@yahoo.com the email address should be your company.com
a great example is an email like support@yourcompany.com or
john.smith@yourcompany.com, your business banking history is vital to your
future success of being able to secure larger business loans,
the date you open your business bank account is the day that lender’s consider
your business to have started, so if you incorporated your business
10 years ago but you just opened the business bank account yesterday, then your
business started yesterday, the longer your business banking history the better
your borrowing potential will be 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 high 5 Bank rating. One
of the most common mistakes when building credit for your company is non-matching
business addresses in your business licenses, even worse is not
having the required licenses for the type of business to operate legally, you
will need to contact the state county and city government offices to see if
there are any required licenses and permits to operate your type of business.
Take sometimes to verify that all of your state business filings is listed correctly,
correctly, county license and/or permit filings are listed correctly, city
license and/or permit filing are listed correctly, and that your IRS filing are
listed correctly. 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, also take the time to ensure every bill you get, power bill phone bill,
landlord, etc. has the business name listed correctly and comes to the
business address. After you setup your business credibly the next step in
business credit building is for you to obtain your business credit reports to
see what’s being reported now and to monitor your business credit building in
real time, business credit reports are offered by Experian, Dun & Bradstreet,
and Equifax, you will first want to get a copy of your business credit reports
with at least D&B or Experian to see what is being reported. For your Experian
report s you can visit www.smartbusinessreports.com for a copy of your mart business report, they
will charge $49.99 for smart business reports. On this report you find out
how many trade lines are
reporting, see if you have a business credit score assigned, see if you have an
active Experian business profile, and check on recent inquiries. You can
purchase a copy of your Equifax small business credit report at
www.equifax.com/small-business it typically take more, it typically takes more time to
create file with Equifax small business than D&B and Experian because
such few company reports Equifax business, this is why it’s important to
apply with the credit providers who report to Equifax so you could build trade
lines on that report as well as Experian and Dun & Bradstreet, Equifax
charges $99.95 for a full business credit report.
Obtaining a Dun and Bradstreet number
(D-U-N-S #) begins the process of building your business credit profile
with them,
your DUNS # will also play an important role in enabling your business
to borrow without a personal guarantor, to get your DUNS #
visit www.dnb.com Dun and Bradstreet sometimes try to charge you $299 to $699
for your DUNS #as part of the package but you do not need to ever pay
for your DUNS # you can get it online at no cost, you can also enroll
for the DNBi self monitor to monitor your credit during the building process,
a subscription for D&B self monitoring is $39.99 per month when you get the
self monitoring you also activate your DUNS # and get your file a D&B
rating, your D&B rating can cost $299 and $899 from D&B now that your
business is setup credibly and you have access to your business credit reports
it’s now time so start building your business credit a business credit report
can be started much the same 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.
A vendor line of credit is when a company or vendor extends a line of
credit to your business on a net 15, 30, 60 or 90 days 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 setup on net 30
terms and where to purchase $300 worth of goods today then that $300 is due
within the next 30 days. Always apply first for vendor credit without using
your social security number, some vendors will request it and some will even tell
you on the phone they need to have it but submit first without it, when your
first net 30 account reports your trade line to Duns and Bradstreet the DUNS
system will automatically activate your file if it isn’t already this is also
true for Experian and Equifax, you need to have a total of at least 5 net
30 day pay accounts reporting to start getting revolving credit, some
vendors require an initial prepaid order before they can approve your business
for terms, your vendors do not necessarily have to serve 100% of your
business needs
keep this in mind as finding initial business credit sources who will approve
you is tough to do. 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. 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 asked for an SSN, after 5 trade lines are established
using vendor accounts obtaining revolving accounts in the next step,
revolving accounts are cards a business owner can use and not be required to pay
full balance owed each months.
Revolving accounts approvals will begin coming from stores, store
revolving credit must be obtained before the business owner starts getting Visa,
MasterCard, American Express type cards, 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 established a profile and score then store credit can be obtained, it usually
takes only 90 days or less to established a score and profile with trade lines.
Once 10 total accounts are on the credit an owner can then start applying for
Visa, MasterCard, Amex type credit. Approval amounts will be equivalent to
the highest credit limit account on the business report, try to have 10 accounts
with at least one of them having a 10k high limit. It is essential to keep using
the credit, keep applying for more and talk with credit providers to raise
credit limits, if you this business credit will keep growing until higher
limit credit lines are obtained within 6-12 months,
contact as today to learn more about how to build credit for your EIN that is not
linked to your SSN.