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Published By Janet Gershen-Siegel at February 3rd, 2018
What do you know about getting business credit cards that do not report to personal credit? Business credit cards that do not report to personal credit are not out of reach. We know the secrets!
Remember that any inquiries into your consumer credit score will negatively impact that score. And a lot of merchants and lenders will carry out inquiries when working with you for the first time. You do not want their inquiries to have an effect on your consumer credit.
Start at the D&B website and obtain a cost-free D-U-N-S number. A D-U-N-S number is how D&B gets a small business in their system, to generate a PAYDEX score. If there is no D-U-N-S number, then there is no record and no PAYDEX score.
Once in D&B’s system, search Equifax and Experian’s sites for the business. You can do this at https://www.creditsuite.com/reports/. If there is a record with them, check it for accuracy and completeness. If there are no records with them, go to the next step in the process.
This way, Experian and Equifax will have activity to report on.
If you operate a small business as a sole proprietor, then at the very least be sure to file for DBA (‘doing business as’) status.
If you do not, then your personal name is the same as the small business name. Because of this, you can find yourself being personally liable for all small business financial obligations.
Also, according to the Internal Revenue Service, with this structure there is a 1 in 7 possibility of an IRS audit. There is a 1 in 50 chance for corporations! Steer clear of confusion and significantly reduce the odds of an Internal Revenue Service audit as well.
And who would not want that?
But don’t look at a DBA filing as being anything beyond a steppingstone to incorporating.
Meet with your tax consultant or financial planner. And together, pick which legal entity (sole proprietor, LLC or S-Corp) will most effectively fit your company and particular financial circumstances.
Incorporation can also help to secure your personal assets. That is in the event of a lawsuit. Once your corporation or LLC is registered on your state’s Secretary of State’s website, you can then get a Business Federal Tax ID Number. So then you can open your business’s bank account.
Visit the Internal Revenue Service web site and get an EIN for the small business. They’re free. Select a business entity such as corporation, LLC, etc.
A small business can begin as a sole proprietor. But they will probably wish to change to a sort of corporation or partnership to minimize risk and make best use of tax benefits.
A business entity will matter when it pertains to taxes and liability in the event of litigation. A sole proprietorship means the entrepreneur is it when it comes to liability and tax obligations. No one else is responsible.
A small business must be reputable to lending institutions and merchants. That is why, a small business will need a professional-looking website and email address, with website hosting bought from a merchant such as GoDaddy.
And company phone and fax numbers must have a listing on ListYourself.net.
At the same time the company telephone number should be toll-free (800 exchange or similar).
A corporation will also need a bank account dedicated strictly to it, and it must have all of the licenses essential for operation. These licenses all have to be in the accurate, accurate name of the company, with the same small business address and phone numbers.
So note that this means not just state licenses, but potentially also city licenses.
Business helps to protect a business owner’s personal assets, in the event of court action or business bankruptcy. Also, with two separate credit scores, an entrepreneur can get two separate cards from the same merchant. This effectively doubles purchasing power.
Another advantage is that even startup companies can do this. Going to a bank for a business loan can be a recipe for disappointment. But building small business credit, when done correctly, is a plan for success.
Consumer credit scores depend on payments but also additional components like credit utilization percentages. But for company credit, the scores truly only hinge on whether a company pays its debts in a timely manner.
Business credit is an asset which can help your business for years to come.
Growing small business credit is a process, and it does not happen automatically. A small business has to actively work to develop business credit. However, it can be done easily and quickly, and it is much quicker than developing individual credit scores.
Merchants are a big aspect of this process.
Doing the steps out of sequence will lead to repetitive denials. Nobody can start at the top with small business credit. For instance, you can’t start with store or cash credit from your bank. If you do you’ll get a rejection 100% of the time.
First you must build trade lines that report. This is also called the vendor credit tier. 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 begin getting retail store and cash credit.
These varieties of accounts often tend to be for the things bought all the time, like coffee, shipping boxes, outdoor work wear, ink and toner, and office furniture.
But to start with, what is trade credit? These trade lines are credit issuers who will give you initial credit when you have none now. Terms are oftentimes Net 30, versus revolving.
So if you get approval for $1,000 in vendor credit and use all of it, you must pay that money back in a set term, such as within 30 days on a Net 30 account.
Net 30 accounts have to be paid in full within 30 days. 60 accounts have to be paid fully within 60 days. Compared to with revolving accounts, you have a set time when you have to pay back what you borrowed or the credit you made use of.
To begin your business credit profile properly, you ought to get approval for vendor accounts that report to the business credit reporting agencies. Once that’s done, you can then make use of the credit.
Then pay back what you used, and the account is on report to Dun & Bradstreet, Experian, or Equifax.
Not every vendor can help like true starter credit can. These are vendors that will grant an approval with very little effort. You also want them to be reporting to one or more of the big three CRAs: Dun & Bradstreet, Equifax, and Experian.
But you may have to apply more than one time to these vendors, and you may have to buy some items you do not need, to demonstrate you are trustworthy and will pay promptly. Consider donating nonessential things to charity.
Once there are 5 to 8 or more vendor trade accounts reporting to at least one of the CRAs, then move onto the retail credit tier. These are companies which include Office Depot and Staples. These companies are more likely to have goods you need.
Use the company’s EIN on these credit applications.
One instance is Lowe’s. They report to D&B, Equifax and Business Experian. They need to see a D-U-N-S and a PAYDEX score of 78 or more.
Are there 8 to 10 accounts reporting? Then progress to the fleet credit tier. These are companies such as BP and Conoco. Use this credit to purchase, fix, and take care of vehicles. Make sure to apply using the business’s EIN.
Have you been responsibly managing the credit you’ve up to this point? Then move to the cash credit tier. These are businesses like Visa and MasterCard. Keep your SSN off these applications; use your EIN instead.
These are businesses like Walmart and Dell, and also Home Depot, BP, and Racetrac. These are usually MasterCard credit cards. If you have 14 trade accounts reporting, then these are in reach.
Know what is happening with your credit. Make sure it is being reported and attend to any mistakes ASAP. Get in the habit of taking a look at credit reports and digging into the particulars, and not just the scores.
We can help you monitor business credit at Experian and D&B for 90% less than it would cost you at the CRAs. See: https://www.creditsuite.com/business-credit-monitoring.Update the info if there are mistakes or the info is incomplete.
So, what’s all this monitoring for? It’s to dispute any errors in your records. Errors in your credit report(s) can be taken care of. But the CRAs usually want you to dispute in a particular way.
Disputing credit report errors generally means you mail a paper letter with copies of any evidence of payment with it. These are documents like receipts and cancelled checks. Never send the originals. Always mail copies and keep the original copies.
Fixing credit report inaccuracies also means you specifically spell out any charges you contest. Make your dispute letter as understandable as possible. Be specific about the issues with your report. Use certified mail so that you will have proof that you sent in your dispute.
Always use credit sensibly! Don’t borrow more than what you can pay off. Track balances and deadlines for payments. Paying on time and fully will do more to increase business credit scores than nearly anything else.
Building company credit pays off. Excellent business credit scores help a small business get loans. Your loan provider knows the small business can pay its financial obligations. They know the business is bona fide.
The company’s EIN links to high scores and lenders won’t feel the need to call for a personal guarantee.
Perks vary. So make sure to choose the perk you prefer from this range of options.
For a 0% APR period, we really like the Ink Business Cash ℠ Credit Card. Also, you pay no yearly fee. It’s got an interest-free time period. It has versatile cash-back rewards. There are spending limits for employees. But you will need to have a credit score of 690 or better.
For Travel Points, we like the Gold Delta SkyMiles Business Credit Card from American Express. Get 30,000 bonus miles. But this is after you make $1,000 in purchases on your new card. And it is during your first three months. Terms and limitations apply.
In addition earn a $50 statement credit. But this is after you make a Delta purchase with your card. And it is in your first 3 months. Earn two miles per dollar spent on purchases made straight with Delta. Also, earn one mile per eligible dollar spent on purchases.
For Low APR/Balance Transfers Business Credit Cards, we prefer the U.S. Bank Business Edge Platinum. So you start with twelve months of 0% APR financing on new purchases and balance transfers. There is a 3% balance transfer fee.
Afterwards, the purchase APR is a variable 10.49% – 18.49%. And this depends upon creditworthiness. There is no annual fee. But this card is solely on offer to those with great or excellent credit. But there is no rewards program for purchases.
Check out the Wells Fargo Business Secured Credit Card. It allows cardholders to secure a credit limit of $500 – $25,000. The amount offered equals the amount of money you offer to secure the line.
Your purchase APR rate can be as low as a variable 13.15%. And the annual fee is $25. But the more cards you have, the more expensive your annual fee is going to be.
This card lets company owners with poor personal credit to acquire a card to make purchases and create business credit.
But the card will just report to the personal credit agencies if you default or are behind on payments.
Additionally, take a look at the Spark Cash Select from Capital One. So you get 1.5% cash back on all purchases. So this is without any limits.
New cardholders can also get a $200 cash bonus. But that is once they spend $3,000 on new purchases. So this is within three months of account opening.
New customers also get introductory APR of 0% on purchases. But that is for nine months. Also, there is no yearly fee.
Consider the Business Gold Rewards Card from American Express OPEN. So you can earn 50,000 Membership Rewards points. But this is after $5,000 in purchases on the card during first three months.
Also, you get three points on your choice of five categories. In addition, get two times the points on the remaining categories.
Also, get one point per dollar on all other purchases. It has a $0 yearly fee for the first year. But afterwards your yearly fee goes up to $175.
Your perfect business credit cards are dependent on your credit history and scores.
Only you can determine which advantages you want and need. So be sure to do your research. What is excellent for you could be disastrous for someone else.
And, as always, make sure to build credit in the recommended order for the best, fastest benefits.
Bolster the professionalism of your company and keep your personal and business credit separate.
You can get business credit cards that do not report to personal credit. Learn more here and get started in getting business credit cards that do not report to personal credit.