Published By Janet Gershen-Siegel at September 22, 2017
Are you looking for 5 vendor accounts that build your business credit? We’ve got them right here.
NOTE: This post has been updated to reflect newer information!
When you are first starting to build business credit, your first step should be vendor or trade credit. You want to get into good credit habits. So this is everything from not borrowing too much, to paying your debts back on time, to staying on good terms with your sources of credit.
You will need to start a business credit profile and score with what are called starter vendors. Starter vendors are ones who will give your small business initial credit even if your company has no credit, no score, or no trade lines. Note that most stores like Staples will not give you initial starter credit, so don’t even try applying with them.
Here are 5 vendor accounts that build your business credit.
You can find Uline’s website here. This company sells shipping, packing, and industrial supplies. These include janitorial supplies, shipping boxes, and material handling products like hand trucks and dollies. Most importantly, they report to Dun and Bradstreet.
Therefore, your small business must have a DUNS number before you start trying to get vendor credit with them. Uline will ask for two references and a bank reference. Your first few orders might need to be pre-paid to initially so that your company can get approved for Net 30 terms.
You can check out Quill online here. They sell office, packaging, and cleaning supplies. Their products also include toner, office furniture, and even coffee and snacks. You can even get your company’s coffee maker through them.
Quill reports to Dun and Bradstreet. You must place your initial order first unless your D & B score has already been established. In general, they will put you on a 90 day prepayment schedule. Plus if you order items each month for three months, they will typically approve you for a Net 30 Account.
You can find Grainger Industrial Supply here. They sell hardware, power tools, pumps and more. They also do fleet maintenance. To qualify, you are going to need the following:
For less than $1000 credit, they will approve nearly anyone with a business license. For over $1000 credit, they want to see trade and bank references. Fax them your application or apply over the phone.
Check out Behalf online here. Behalf is a means of having your customers pay you using an app. They also provide funding. The two go hand in hand, so if you start off with your customers using their app, you will have a better chance at getting good funding terms. They offer purchase financing, and also have a virtual MasterCard in order to facilitate funding your purchases.
They can give you terms of 30 to 180 days. Behalf reports to all three of the big business CRAs: Dun & Bradstreet, Experian, and Equifax. That makes them extremely valuable for building business credit.
Behalf’s fees are based on the terms they offer to customers. Their fees rise as the number of days to pay rise, with an apparent cap at 3%. Behalf offers products to both merchants and their business customers. For business customers, you select the amount to finance, and the amount of time to pay it back. Then choose if you will pay on a monthly or a weekly basis.
Since the end of 2017, all funding from Behalf is through FinWise, a Utah-chartered bank which is located in Sandy, Utah.
There’s one important thing to note. Behalf online lender will make a hard inquiry on your personal credit when you first apply for financing.
Behalf has a maximum line size of $50,000. It can extend this in instant purchase capacity to any business customer. Their minimum transaction size is $300. Plus there is no upper limit on individual purchase transactions.
Monthly fees start at 1%, and there is a fixed monthly rate. There are no origination fees and no maintenance fees. You can save 10% on finance fees by choosing a weekly plan.
Advantages to online lender Behalf include a fixed monthly rate to make your budgeting easier. In addition, there is a discounted rate option if you select weekly payments.
Disadvantages include higher fees if you give your clients longer payment terms. As a result, a business will suffer a penalty for providing better payment terms to its customers.
For companies just starting out, allowing for longer payment terms for customers can help to convert one-time customers into regulars. But because Behalf effectively penalizes a company for providing longer terms, this is a strike against using them. That is, if your company is a startup trying to build a reputation with your clients.
Have a look at the Wells Fargo Business Secured Credit Card. It allows cardholders to secure a credit limit of $500 – $25,000. The amount available equals the amount of money you offer to secure the line. Your purchase APR rate can be as low as a variable 13.15%.
The yearly fee is $25. However, the more cards you have the more expensive your annual fee will be.
This card allows business owners with unsatisfactory personal credit to acquire a card to make purchases and develop business credit. The card will only report to the personal credit bureaus if you default or are behind on payments.
Get it here: https://www.wellsfargo.com/biz/business-credit/credit-cards/secured-card/. They report to Experian.
Getting vendor accounts for business credit means that you are on your way to getting good business credit. Once you have five or more vendor accounts and they are all reporting with the bigger business credit bureaus, then you can start trying to get store credit.
Once there are 5 – 8 or more vendor trade accounts reporting to at least one of the CRAs, then move onto revolving store credit. These are businesses such as Office Depot and Staples. These companies are more likely to have goods you need. Use the small business’s EIN on these credit applications.
One good example is Lowe’s. They report to D&B, Equifax and Business Experian. They want to see a DUNS and a PAYDEX score of 78 or better.
Are there 8 – 10 accounts reporting? Then move to fleet credit. These are service providers such as BP and Conoco. Use this credit to buy, fix, and take care of vehicles. Make certain to apply using the corporation’s EIN.
One such example is Shell. They report to D&B and Business Experian. They need to see a PAYDEX Score of 78 or better and a 411 company telephone listing. Shell may say they want a particular amount of time in business or profits. But if you already have enough trade lines, that won’t be required and you can still get an approval.
Have you been sensibly managing the credit you’ve gotten up to this point? Then progress to cash credit. These are service providers like Visa and MasterCard. Keep your SSN off these applications; use your EIN instead.
One example is the Fuelman MasterCard. They report to D&B and Equifax Business. They need to see a PAYDEX Score of 78 or better; 10 trade lines reporting on your D&B report; and a $10,000 high credit limit reporting on D&B report (other account reporting). Plus they want you to have an established corporation.
These are companies such as Walmart and Dell, and also Home Depot, BP, and Racetrac. These are typically MasterCard credit cards. If you have 14 trade accounts reporting, then these are attainable.
Know what is happening with your credit. Make sure it is being reported and deal with any inaccuracies ASAP. Get in the habit of taking a look at credit reports and digging into the details, and not just the scores.
At Experian, you can monitor your account at: http://www.smartbusinessreports.com/Landing/1217/.
And at Equifax, you can monitor your account at: http://www.equifax.com/business/business-credit-monitor-small-business. Experian and Equifax cost $19.99; D&B ranges from $49.99 to $99.99.
Update the details if there are mistakes or the information is incomplete. At D&B, you can do this at: https://iupdate.dnb.com/iUpdate/viewiUpdateHome.htm.
And at Experian, go to: http://www.experian.com/small-business/business-credit-information.jsp.
Finally, for Equifax, go to: http://www.equifax.com/business/small-business.
What’s all this monitoring for? It’s to challenge any errors in your records. Errors in your credit report(s) can be fixed. But the CRAs normally want you to dispute in a particular way.
Get your small business’s PAYDEX report at: http://www.dnb.com/about-us/our-data.html.
You can get your company’s Experian report at: http://www.businesscreditfacts.com/pdp.aspx?pg=SearchForm.
And get your Equifax business credit report at: http://www.equifax.com/business/credit-information.
Disputing credit report errors typically means you send a paper letter with copies of any evidence of payment with it. These are documents like receipts and cancelled checks. Never mail the originals. Always send copies and keep the original copies.
Disputing credit report errors also means you precisely spell out any charges you dispute. Make your dispute letter as understandable as possible. Be specific about the concerns with your report. Use certified mail so that you will have proof that you sent in your dispute.
Dispute your or your corporation’s Equifax report by following the instructions here: http://www.equifax.com/small-business-faqs/#Dispute-FAQs.
You can dispute errors on your or your business’s Experian report by following the directions here: http://www.experian.com/small-business/business-credit-information.jsp.
And D&B’s PAYDEX Customer Service telephone number is here: https://www.dandb.com/glossary/paydex/, to help you with disputes.
Always use credit responsibly! Don’t borrow more than what you can pay off. Monitor balances and deadlines for payments. Paying off punctually and in full will do more to increase business credit scores than nearly anything else.
Establishing small business credit pays. Great business credit scores help a company get loans. Your lender knows the company can pay its financial obligations. They know the small business is authentic. The company’s EIN links to high scores and loan providers won’t feel the need to require a personal guarantee.
Discover this new way to build business credit.