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Published By Janet Gershen-Siegel at August 26th, 2018
When you are initially beginning to set up corporate credit, your first step needs to be vendor or trade credit. You want to get into good credit practices. This means you are going to need vendors who help build business credit.
So this is everything from not borrowing too much, to paying your debts back on schedule, to staying on good terms with your sources of credit.
The absolute most vital thing you can do, which will make the swiftest and biggest beneficial difference, is to pay off your invoices punctually or early. This way, you establish a responsible and good payment record. It matters far more than virtually anything else you can do.
So keep in mind you will need to do this regardless of which vendor(s) you work with.
You will need to start a corporate credit profile and score with what are called starter vendors. These are also known as trade accounts or trade lines. Starter vendors are ones who will bring your small business initial credit even though your firm has no credit, no score, or no trade lines.
Note that the majority of the more prominent and better known merchants like Staples or Walmart will not give you initial starter credit, so do not even try starting a business credit application with them.
Here are three vendor accounts that you can use to start to develop your corporate credit. And be sure to keep in mind: if you are rejected in the beginning, keep making an effort!
This company offers for sale shipping, packing, and industrial supplies. These feature janitorial materials, shipping boxes, and material handling products just like hand trucks and dollies. Most importantly, they report to Dun and Bradstreet and Experian.
That is why your business must have a D-U-N-S number before you start trying to get vendor credit with them.
Uline will want two references and a bank reference. Your initial few orders might need to be prepaid at first so that your company can get approved for Net 30 terms.
Grainger Industrial Supply sells hardware, power tools, pumps and more. They also do fleet maintenance. To qualify, you need the following: a business license, An EIN number, and a D-U-N-S number from Dun & Bradstreet.
For less than $1,000 credit, they will approve nearly anyone with a business license. For over $1,000 credit, they want to see trade and bank references. Fax them your application or apply over the phone. You can visit them online at: www.grainger.com.
Check out 76 online at: 76fleet.com. Buy fuel through 76, at more than 1800 sites in the United States.
76 reports to all three of the big business CRAs: Dun & Bradstreet, Experian, and Equifax. That makes them extremely valuable for building business credit.
But keep in mind, before applying for multiple accounts with WEX Fleet cards, make sure to have enough time in between applying so that they do not red flagged your account for fraud.
If not approved based on business credit history or been in business less than 1 year, then a $500 deposit is needed or a Personal Guarantee(PG)
Can be used at any P66, 76, or Conoco fueling location.
Online or over the phone
Crown Office Supplies is another true starter vendor. You can find them online at https://crownofficesupplies.com. They sell a variety of office supplies and take helping clients seriously. They state, “just starting your business, or maybe have an existing business, but you have a question regarding office supplies… we are here to help!” And they report to Dun and Bradstreet, Experian, and Equifax.
There is a $99.00 yearly fee, though they do report that fee to the business credit reporting bureaus. For other purchases to report, the purchase needs to be at least $30.00. Terms are Net 30.
Once there are 3 or more vendor trade accounts reporting to at least one of the CRAs, great! Now you can progress to revolving store credit.
Use the business EIN on these credit applications.
Are there more accounts reporting? Then progress to fleet credit. These are businesses such as BP and Conoco. Use this credit to purchase fuel, and to repair and take care of vehicles. Also, make certain to apply using the company EIN.
After that, the next stop is cash credit. These are companies like Visa and MasterCard. Keep your SSN off these applications.Use your EIN instead.
These are normally MasterCard credit cards. If you have more trade accounts reporting, then these are doable.
Use your credit responsibly and start with the vendors who help build business credit.
The easiest way to keep your scores high is to know what those scores are in the first place.
Know what is happening with your credit. Make sure it is being reported and address any mistakes as soon as possible. Get in the practice of taking a look at credit reports. Dig into the details, not just the scores.
We can help you monitor business credit at Experian and D&B for a lot less than it would cost at the CRAs. Update the data if there are errors or the details is incomplete.
So, what is all this monitoring for? It is to contest any problems in your records. Errors in your credit report(s) can be corrected. But the CRAs typically want you to dispute in a particular way.
Disputing credit report inaccuracies normally means you mail a paper letter with copies of any proof of payment with it. These are documents like receipts and cancelled checks. Never send the original copies. Always mail copies and retain the original copies.
Disputing credit report mistakes also means you precisely detail any charges you challenge. Make your dispute letter as clear as possible. Be specific about the concerns with your report. Use certified mail so that you will have proof that you mailed in your dispute.
Always use credit sensibly! Do not borrow more than what you can pay back. Track balances and deadlines for payments. Paying on schedule and fully will do more to elevate business credit scores than nearly anything else.
Growing company credit pays. Great business credit scores help a company get loans. Your lender knows the business can pay its financial obligations. They understand the small business is authentic.
The company EIN connects to high scores, and lenders will not feel the need to demand a personal guarantee.
Business credit is an asset which can help your small business for many years to come.
So, getting merchant accounts for small business credit means that you are on your way to acquiring excellent business credit.
Once you have more than five vendor accounts and they are all reporting with the bigger business credit bureaus, then you can start getting store credit. These should easily get you started.