Published By Janet Gershen-Siegel at July 17th, 2018
Build business credit with your EIN today. Your EIN number is important.
Do you know the 8 steps to build business credit with your EIN not linked to your personal credit? You don’t have to empty your wallet in order to build business credit.
Assure potential credit issuers that your business is Fundable by taking steps to assure them that it is a true business and not just a hobby. This means registering your business with your local Secretary of State, and it can mean getting a toll-free number.
It also means building a website and getting it hosted through a company like GoDaddy, getting a business email linked directly to your domain, and using a brick and mortar address or a virtual address. That is, anything but a PO Box number or a UPS Box address.
Remember that any inquiries into your personal credit score are going to hurt that score. And a lot of businesses and lenders will perform inquiries when working with you for the very first time. You do not want their inquiries to have an effect on your personal credit.
Hence, if you can help it at all, try not to dip into personal savings or use personal credit cards. You want to rely on your business’s creditworthiness, and not your own.
You can’t get into Dun & Bradstreet’s system without having one, and they are free, anyway. A D-U-N-S number differentiates your small business from all others, such as similarly-named companies. Dun & Bradstreet requires that you register your business on their site before they will provide a DUNS number.
Please keep in mind: there are a few slightly different ways of getting a DUNS number if your company is in a specific class. These include if your business is an American government contractor or grantee, or your company is Canadian, or you are working as an Apple developer.
If you run your business as a sole proprietor at least apply for DBA. If you do not, then your personal name will end up the same as your business name. As a result, you can still end up personally liable for all your small business financial obligations.
But never look at a DBA filing as being anything more than a gateway to incorporating.
Meet with your tax specialist or financial planner to determine which legal entity (LLC, C-Corp, or S-Corp) will ideally fit your small business and particular financial situation.
Incorporation can also help to safeguard your personal assets in case of a lawsuit. Once your corporation or LLC is registered on your state’s Secretary of State’s site, you can then get a Business Federal Tax ID Number. This is so you can open your business’s bank account.
The IRS makes it easy to do this. You can apply on the internet once you ascertain your eligibility.
If this is so, then you can go ahead.
Ask your neighborhood bank about getting business checking and various other accounts. If you have been a reliable client on the personal side of things, and you can show your company is paying its bills punctually, then your financial institution is going to be a lot happier loaning to your business.
If the bank says no, then check online for banks which cater to your industry as they may be out there.
But no matter where you do your business’s banking, keep at least $10,000 in your account at all times. This will give you a better bank credit score and that will help you get loans later.
These are really any invoices which are the direct obligation of your small business. These include everything from Wi-Fi in your company’s name to the lease or a mortgage for your office space. Your small business could pay a cellular carrier or maybe the oil or gas bill, if that is appropriate. Your business will notice credit scores increase as you pay the bills in a timely manner.
When you build business credit with your EIN, it is a process. It does not occur automatically. A corporation needs to proactively work to develop corporate credit. However, it can be accomplished readily and quickly, and it is much more rapid than developing personal credit scores. Merchants are a big part of this process.
Accomplishing the steps out of order will result in repetitive rejections. Nobody can start at the top with corporate credit. Once you’ve done the first 10 steps, add these. This is how to build business credit without using personal credit. It’s how to build business credit with EIN.
First you need to establish trade lines that report. This is also called vendor accounts. Then you’ll have an established credit profile, and you’ll get a business credit score.
And with an established business credit profile and score you can start getting more credit.
These kinds of accounts tend to be for the things bought all the time, like cleaning supplies, ink and toner, and office furniture.
But first off, what is trade credit? These trade lines are creditors who will give you starter credit when you have none now. Terms are in most cases Net 30, rather than revolving.
Therefore, if you get an approval for $1,000 in vendor credit and use all of it, you must pay that money back in a set term, like within 30 days on a Net 30 account.
You want 3 of these to move onto the next step.
Uline is a true starter vendor. Find them online at https://www.uline.com/. They offer shipping, packing, and industrial supplies, and they report to D&B and Experian.
You have to have a DUNS number. They will ask for 2 references and a bank reference. The first few orders may need to be paid in advance to first get approval for Net 30 terms.
Marathon Petroleum Company provides transportation fuels, asphalt, and specialty products throughout the United States. This card reports to Dun & Bradstreet, Experian, and Equifax. Before applying for multiple accounts with WEX Fleet cards, make sure to leave enough time between applications so they don’t red-flag your account for fraud.
Your SSN is required for informational purposes. If concerned they will pull your personal credit talk to their credit department before applying. You can give a $500 deposit instead of using a personal guarantee, if in business less than a year. Apply online. Terms are Net 15. Get it here: www.marathonbrand.com.
Grainger Industrial Supply is likewise a true starter vendor. Find them online at https://www.grainger.com/. They sell safety equipment, plumbing supplies, and more, and they report to D&B. You will need to have a business license, EIN, and a DUNS number.
Non-Reporting Trade Accounts can also be helpful. While you do want trade accounts to report to a minimum of one of the CRAs, a trade account which does not report can still be of some worth. You can always ask non-reporting accounts for trade references. And credit accounts of any sort ought to help you to better even out business expenses, thus making financial planning easier.
Know what is happening with your credit. Make sure it is being reported and attend to any errors as soon as possible. Get in the habit of checking credit reports. Dig into the details, not just the scores.
We can help you monitor business credit at Experian, Equifax, and D&B for 90% less. Update the info if there are mistakes or the data is incomplete.
So, what’s all this monitoring for? It’s to contest any problems in your records. Mistakes in your credit report(s) can be corrected. But the CRAs typically want you to dispute in a particular way.
Disputing credit report inaccuracies typically means you specifically detail any charges you dispute.
Always use credit responsibly! Don’t borrow more than what you can pay off. Track balances and deadlines for payments. Paying off punctually and fully will do more to boost business credit scores than almost anything else.
Growing company credit pays off. Excellent business credit scores help a business get loans. Your loan provider knows the business can pay its debts. They recognize the business is for real. The small business’s EIN links to high scores, and creditors won’t feel the need to require a personal guarantee.
Business credit is an asset which can help your company for many years to come.
Bolster the professionalism of your company and keep your personal and business credit separate. Use your EIN instead of your Social Security number. Let your business’s creditworthiness do the heavy lifting. Learn more here and get started so you can build business credit with your EIN.