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Where to Establish Business Credit: The Magical Secret of the Vendor Credit Tier

Published By Janet Gershen-Siegel at April 1st, 2018

Learn Where to Establish Business Credit and Celebrate as Your Business Takes Off!

Do you know where to establish business credit? When you are first beginning to establish company credit, your very first step should be vendor or trade credit. This is called the vendor credit tier. It is an almost magical way to get started.

Where to Establish Business Credit: It Starts with the Basics

No matter what, you want to enter into good credit practices. Hence this is everything from not borrowing too much, to paying your debts back promptly. And it also includes staying on good terms with your sources of credit. The absolute most vital thing you can possibly do, which will make the swiftest and greatest beneficial effect, is to pay off your invoices punctually or early. And develop a responsible and good payment record.

Where to Establish Business Credit: Getting Started

You will have to launch a commercial credit profile and score with what are called starter vendors (also known as trade accounts or trade lines). Vendor credit tier vendors are ones who will give your small business initial credit. And they will do so even though your company has no credit, no score, or no trade lines.

Note that many of the more prominent and better known merchants like Staples or Walmart will not extend to you initial starter credit. So do not even try starting a credit application with them.

Here are three vendor accounts which you can use to begin to develop your commercial credit. This is where to establish business credit. And bear in mind: if you are declined in the beginning, keep trying!

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Where to Establish Business Credit: 1. Uline Shipping Supplies

Where to Establish Business CreditUline Shipping Supplies is a true starter vendor. You can find them online at www.uline.com.

This company offers for sale shipping, packing, and industrial supplies. These feature janitorial products and shipping boxes. And they also sell material handling products such as hand trucks and dollies. Most importantly, they report to Dun and Bradstreet.

For this reason, your business must have a D-U-N-S number before you start trying to get vendor credit with them. Uline will request two references and a bank reference. Your very first few orders might need to be prepaid in the beginning. This is to ensure that your small business can get approved for Net 30 terms.

Where to Establish Business Credit: 2. Quill

Quill is another true starter vendor. You can find them online at www.quill.com.

They market office, packaging, and cleaning products. Their product lines also feature toner, office furniture, and even coffee and snacks. You can even get your small business’s coffee machine through them.

Quill reports to Dun and Bradstreet and Experian. Since Quill reports to two separate credit reporting agencies, you get two credit experiences with them.

You must place your initial order before anything else. But there’s an exception if your D & B score has already been established. In general, they will place you on a 90 day prepayment schedule. In addition if you order products monthly for three months, they will often approve you for a Net 30 Account.

Where to Establish Business Credit: Grainger Industrial Supply

Grainger Industrial Supply is also a true starter vendor. You can find them online at www.grainger.com. They sell safety equipment, plumbing supplies, and more, and they report to D&B. You will need a business license, EIN, and a D-U-N-S number.

For less than a $1000 credit limit they will approve nearly anybody with a business license.

Where to Establish Business Credit: How to Do it

Business credit is credit in a small business’s name. It doesn’t connect to an owner’s personal credit, not even if the owner is a sole proprietor and the only employee of the company.

Thus, an entrepreneur’s business and individual credit scores can be very different.

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The Benefits

Considering that small business credit is independent from consumer, it helps to protect a small business owner’s personal assets, in case of a lawsuit or business insolvency.

Also, with two separate credit scores, a small business owner can get two different cards from the same merchant. This effectively doubles purchasing power.

Another benefit is that even startup ventures can do this. Visiting a bank for a business loan can be a recipe for disappointment. But building small business credit, when done the right way, is a plan for success.

Consumer credit scores are dependent on payments but also other elements like credit use percentages.

But for business credit, the scores really only hinge on if a small business pays its debts in a timely manner.

Hit the jackpot with our best webinar and its trustworthy list of seven vendors who can help you build business credit.

The Process

Building small business credit is a process, and it does not happen without effort. A business will need to actively work to build business credit.

That being said, it can be done readily and quickly, and it is much more efficient than building individual credit scores.

Vendors are a big aspect of this process.

Performing the steps out of order will cause repetitive rejections. No one can start at the top with business credit. For instance, you can’t start with retail or cash credit from your bank. If you do, you’ll get a denial 100% of the time.

Business Fundability

A business needs to be fundable to lending institutions and merchants.

Therefore, a company will need a professional-looking web site and e-mail address. And it needs to have website hosting bought from a vendor like GoDaddy.

Also, business telephone and fax numbers ought to have a listing on 411.com.

Likewise, the company telephone number should be toll-free (800 exchange or the like).

A company will also need a bank account dedicated only to it, and it must have every one of the licenses essential for running.

Licenses

These licenses all have to be in the specific, accurate name of the small business. And they need to have the same business address and phone numbers.

So note, that this means not just state licenses, but potentially also city licenses.

Hit the jackpot with our best webinar and its trustworthy list of seven vendors who can help you build business credit.

Working with the Internal Revenue Service

Visit the IRS website and obtain an EIN for the business. They’re totally free. Select a business entity such as corporation, LLC, etc.

A small business can get started as a sole proprietor. But they will most likely want to switch to a form of corporation or an LLC.

This is in order to lessen risk. And it will maximize tax benefits.

A business entity will matter when it concerns taxes and liability in case of litigation. A sole proprietorship means the business owner is it when it comes to liability and tax obligations. Nobody else is responsible.

Sole Proprietors Take Note

If you run a company as a sole proprietor, then at least be sure to file for a DBA. This is ‘doing business as’ status.

If you do not, then your personal name is the same as the company name. Hence, you can end up being directly accountable for all business debts.

Plus, according to the IRS, using this arrangement there is a 1 in 7 probability of an IRS audit. There is a 1 in 50 chance for corporations! Prevent confusion and noticeably reduce the odds of an IRS audit at the same time.

Beginning the Business Credit Reporting Process

Begin at the D&B website and get a totally free D-U-N-S number. A D-U-N-S number is how D&B gets a 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 websites for the company. You can do this at 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.

In this way, Experian and Equifax will have something to report on.

Where to Establish Business Credit:  Vendor Credit Tier

First you need to establish 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 to acquire credit in the retail and cash credit tiers.

These types of accounts tend to be for the things bought all the time, like marketing materials, 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 starter credit when you have none now. Terms are usually Net 30, instead of revolving.

So, if you get approval for $1,000 in vendor credit and use all of it, you will need to pay that money back in a set term, like within 30 days on a Net 30 account.

Hit the jackpot with our best webinar and its trustworthy list of seven vendors who can help you build business credit.

Details

Net 30 accounts must be paid in full within 30 days. 60 accounts have to be paid fully within 60 days. In contrast to with revolving accounts, you have a set time when you must pay back what you borrowed or the credit you used.

To start your business credit profile the right way, you ought to get approval for vendor accounts that report to the business credit reporting bureaus. As soon as that’s done, you can then use the credit.

Then pay back what you used, and the account is on report to Dun & Bradstreet, Experian, or Equifax.

Vendor Credit Tier – It Helps

Not every vendor can help in the same way true starter credit can. These are merchants that will grant an approval with nominal effort. You also need them to be reporting to one or more of the big three CRAs: Dun & Bradstreet, Equifax, and Experian.

You want 5 to 8 of these to move onto the next step, which is the retail credit tier. But you may need to apply more than one time to these vendors. So, this is to validate you are responsible and will pay timely.

For three excellent starter vendors, check above – Uline, Quill, and Grainger.

Where to Establish Business Credit:  Accounts That Don’t Report

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 nonetheless be of some value.

You can always ask non-reporting accounts for trade references. Also credit accounts of any sort will help you to better even out business expenditures, therefore making financial planning easier. These are providers like PayPal Credit, T-Mobile, and Best Buy.

Where to Establish Business Credit:  Retail Credit Tier

Once there are 5 to 8 or more vendor trade accounts reporting to at least one of the CRAs, then move to the retail credit tier. These are service providers like Office Depot and Staples.

Just use your SSN and date of birth on these applications for verification purposes. For credit checks and guarantees, use the business’s EIN on these credit applications.

One such example 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 higher.

Where to Establish Business Credit:  Fleet Credit Tier

Are there 8 to 10 accounts reporting? Then move onto the fleet credit tier. These are companies like BP and Conoco. Use this credit to buy fuel, and to fix, and take care of vehicles. Only use your Social Security Number and date of birth on these applications for verification purposes. For credit checks and guarantees, make certain to apply using the small business’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 business phone listing.

Shell might say they want a particular amount of time in business or revenue. But if you already have adequate vendor accounts, that won’t be necessary. And you can still get approval.

Hit the jackpot with our best webinar and its trustworthy list of seven vendors who can help you build business credit.

Where to Establish Business Credit:  Cash Credit Tier

Have you been responsibly handling the credit you’ve up to this point? Then move to the cash credit tier. These are businesses such as Visa and MasterCard. Only use your SSN and date of birth on these applications for verification purposes. For credit checks and guarantees, 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. And they also want you to have 10 trade lines reporting on your D&B report.

Plus, they want to see a $10,000 high credit limit reporting on your D&B report (other account reporting).

Additionally, they want you to have an established small business.

These are businesses like Walmart and Dell, and also Home Depot, BP, and Racetrac. These are commonly MasterCard credit cards. If you have 14 trade accounts reporting, then these are attainable.

Hit the jackpot with our best webinar and its trustworthy list of seven vendors who can help you build business credit.

Monitor Your Business Credit

Know what is happening with your credit. Make certain 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 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: www.creditsuite.com/monitoring.

At D&B you can monitor at: www.dandb.com/credit-builder. At Experian, you can monitor your account at: www.smartbusinessreports.com/Landing/1217/. And at Equifax, you can monitor your account at: www.equifax.com/business/business-credit-monitor-small-business. Experian and Equifax cost about $19.99; D&B ranges from $49.99 to $99.99.

Update Your Records

Update the data if there are mistakes or the info is incomplete. At D&B, you can do this at: https://iupdate.dnb.com/iUpdate/viewiUpdateHome.htm. For Experian, go here: www.experian.com/small-business/business-credit-information.jsp. And for Equifax, go here: www.equifax.com/business/small-business.

Fix Your Business Credit

So, what’s all this monitoring for? It’s to contest any problems in your records. Errors in your credit report(s) can be corrected. But the CRAs often want you to dispute in a particular way.

Get your company’s PAYDEX report at: www.dnb.com/about-us/our-data.html. Get your company’s Experian report at: www.businesscreditfacts.com/pdp.aspx?pg=SearchForm. And get your Equifax business credit report at: www.equifax.com/business/credit-information.

Disputes

Disputing credit report inaccuracies usually means you send a paper letter with duplicates of any proofs of payment with it. These are documents like receipts and cancelled checks. Never mail the original copies. Always mail copies and keep the original copies.

Fixing credit report mistakes also means you precisely spell out any charges you contest. Make your dispute letter as understandable as possible. Be specific about the problems with your report. Use certified mail so that you will have proof that you sent in your dispute.

Dispute your or your company’s Equifax report by following the instructions here: www.equifax.com/small-business-faqs/#Dispute-FAQs.

You can dispute inaccuracies on your or your small business’s Experian report by following the instructions here: www.experian.com/small-business/business-credit-information.jsp.

And D&B’s PAYDEX Customer Service contact number is here: www.dandb.com/glossary/paydex.

A Word about Business Credit Building

Always use credit responsibly! Never borrow more than what you can pay back. Keep track of balances and deadlines for repayments. Paying off punctually and fully will do more to elevate business credit scores than pretty much anything else.

Growing company credit pays off. Good business credit scores help a business get loans. Your lender knows the small business can pay its financial obligations. They recognize the company is bona fide.

The company’s EIN attaches to high scores and lenders won’t feel the need to require a personal guarantee.

Business credit is an asset which can help your business in years to come.

Where to Establish Business Credit:  Takeaways

Obtaining merchant accounts for business credit signifies that you are on your way to obtaining great small business credit. Once you have more than five vendor accounts and they are all reporting with the bigger business credit bureaus, then you can begin to access the retail credit tier. These three should quickly get you started.

And now you know where to establish business credit.

Hit the jackpot with our best webinar and its trustworthy list of seven vendors who can help you build business credit.

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