# Business Credit 101



## NeoNiko (May 12, 2007)

*POSTER'S NOTE: I did not write this. But I did find it on myfico and felt that it is better served here since I have see this topic come up many times.*

*Establish the Business*

1. NAME YOUR COMPANY - The first step in this process is to select a company name. Be sure you pick one that has not been selected by another company in your state, You can check with you Secretary of State and once that is done you can move onto the next step.

2. INCORPORATE YOUR COMPANY - Now that you have selected your business name, you are going to need to establish your corporation with the state of your choosing. To do this, you can go to "Free Registered Agent". which is owned by InCorp Services. They will give you registered agent services free for the first year. They also only charge a nominal fee plus your states filing fees to incorporate your business.

3. OBTAIN AN EIN - Once you have incorporated your business you will need to obtain a Federal Employer Identification Number. You can file form SS-4 online at the Internal Revenue Service website.
http://www.irs.gov/businesses/small/article/0,,id=102767,00.html
Once you have completed this form you will obtain your EIN in a matter of seconds. Be sure to print it out and write it down because they do not send you an email confirmation. This is the number that you will need in order to apply for credit under your business name without a personal guarantee.

4. ESTABLISH A LOCATION - So now you have your EIN and are incorporated. Your business needs to have a physical location that is not your home address. The UPS store will not work because most creditors have them flagged. An alternative is to get a virtual office in your home town. Most of these will supply you with a lease agreement (sometimes needed to get credit), license hanging services, your name on a wall plaque at the location, and mail forwarding services. You should be able to find these services bundled for about $100 per month. In addition, some of these places will even allow you small usage of the buildings conference room and offices for an additional fee. This is great if you just need a completely quiet place to work for a few hours or if you need to sign a contract or conduct a meeting.

5. ESTABLISH PHONE SERVICE - Now that you have a physical location for your business, you will need to establish a utility bill using your newly received EIN and business address. There are many choices for this step of the process.

a) Contact your local telephone companies business sales department and request what they call a Remote Call Forwarding Number. This is a number that the phone company manages at their and is forwarded to a number of your choosing. They will usually charge a setup fee and $10 to $15 per month. Make sure you give them the address of the office that you set up and the EIN number. Also make sure that they will list you in the 411 directory under your address, not theirs.

b) Another method is to get an 800 number and have it forwarded to a number of your choosing. You can then utilize "List Yourself" to add yourself to your local 411. However, this is not recommended because there is still no free way (that I know of) to list yourself in the national 411 directories.

c) For those of you that need a true business line, you can subscribe to the Vonage Small Business Premium service (or any other small business VOIP service) and for $49.99 per month and they will list your business in both your local and national 411 directories.

6. ESTABLISH A CHECKING ACCOUNT - Once you have all of that in order, you can now open your corporate checking account. Many banks only require $100 to open the account, 2 forms of identification, and your Articles of Incorporation. 

7. OBTAIN A D-U-N-S NUMBER - Now you need to go to Dun & Bradstreet and obtain a D-U-N-S Number. In the two more years of buidling business credit I have noted one ever constant factor.... Dun & Bradstreet is the leading cause of headaches for businesses trying to build a credit file.







New business owners are especially prone to the sales pitches thrown by commission hungry DUNS sales reps. Just about every new business owner tends to ask a question about DUNS or ends up complaining about them. 

The front lines of D&B are covered by the DUNS sales representatives. More often than not if you are trying to get a DUNS number from them it starts the vicious cycle of how worthless simply having the number will be and how you "need" to buy CreditBuilder or another product to have a full rated file. The plain and simple fact is, you do NOT need to buy anything from DUNS to end up with a fully rated file! DUNS sales reps will of course try and tell you otherwise in hopes of making you pay. 

Unlike personal credit CRAs, DUNS is not governed by the FCRA. They are a loose canon existing within a realm of pure gray area when it comes to regulation. Simply put, they can screw you and get away with it if your not careful.First thing that has often been misunderstood is that you need to get a DUNS number in order to have a file. Or that you need to contact DUNS to open a file or get a number. This is misinformation.

A DUNS number can and is automatically created by one of the following: 

a) When your first NET30 account reports the tradeline the DUNS system will automatically create your number and file. 

b) If you are incorporated, the Secretary of State in your state will often automatically report your corporation's existence as it reports quarterly or semi-annually to DUNS.

I am unsure if every states SOS office in fact does this. Many I know do. The best bet for auto creation is to simply open some starter NET30 Internet based office suppliers (see below). Be sure and use the account and then promptly pay the invoice you get. Most of these places will open you a NET30 terms account with as little as a 411 phone listing for your company. There are enough of these vendors out there to use if one or the other gives you grief insisting they need to see a credit file. Some of these vendors may ask you to place an initial prepaid order. No biggie. Get it out of the way and move on to having a NET30 terms account. Many will open you one from the start no questions asked.

If you need a DUNS number immediately it can often be obtained from the government contracts site:
http://fedgov.dnb.com/webform/pages/CCRSearch.jsp

Though it's just as easy to let it auto create. The thing you MUST be is PATIENT! It's not going to all happen in a day or even a week. If you miss out on the vendors reporting cycle it may take a number of weeks for the NET30 to report. But given your alternative of calling the main DUNS numbers and getting grief from the commission hungry reps and possibly getting your file flagged by a rep who is going to try to hamstring you or otherwise extort services from you, it would be wise to just let it auto create.
Again, you DO NOT need to call DUNS to get a number or file. Just like Experian business files, DUNS will auto create with the SOS or first tradeline data.

When you do a search on DUNS for your business and it finally shows up, then you want to get eupdate access. In order to access your eupdate report you need two things, your DUNS number and an eupdate password. The easiest way to accomplish this is to click your business when it shows up in a search. It will give you several different type reports you can buy on the company. Select the cheap $9.99 basic report. All you want is the DUNS number here. Buying more expensive reports will likely not yield any other info given how new your company is. Don't waste your money. Spend the $9.99. Buy the report. You will then get to see your DUNS number.

Ok, go to eupdate....

https://eupdate.dnb.com/ (keep in mind that the eupdate site is frequently down for whatever reason)
Bookmark this page. But do not do anything yet cause chances are if you fill out the sign up info at this point your just gonna get an error page saying your entered info doesn't match what's on file. The real problem actually is that your report doesn't have all the info on file for the eupdate system to match against.

Instead, call 1-866-834-4699. This is the entity department. Tell them your DUNS number and that you are having an issue getting your eupdate password. They will either verify company info with you right then and there or they will take your company and phone number and put you on the callback list for their department. If they tell you the rep will call you, they will and be sure to answer the phone when you see them calling (this department is not the sales department) they will run down the company info asking about biz stats and owners, etc. They will probably ask for financials to round out your report. All this really means is they want a copy of a balance sheet. If you don't do them typically, go on Google and find a balance sheet template and fill it out. They will give you a fax number to send it to.

After they take your info you need to let the new info register into their system. This may take a day or two. At this point if they haven't already emailed you an eupdate password, the info that will allow the system to send you one should now be on their system and you can go up to the aforementioned eupdate link and sign up. They should simply send you one within a day or two after taking all your info. 

When you talk to the rep at the above number, or the one that calls you back, be sure to get their direct number and extension as to follow up should they put an error in your file like an incorrectly spelled name or phone number. When you get your eupdate password log in. Do not choose the edit profile option. Just choose the one that lets you see the report. Any time you hit the edit button, DUNS keeps a running count and if you go into edit mode too much they will flag your file. You can get updates done easier when dealing with this department anyway. Most things you enter into eupdate will get you a verification call from DUNS anyway, so just don't screw with the edit section. 

Also don't look at your eupdate every day. Updates are typically only done once a week and visible on Sundays anyway. So look on Sunday.

Other helpful hints.... 

- Do NOT go on app sprees. Inquiries set off alarms with DUNS and gets your file sent to an early fraud department which often results in your file being frozen with all reporting data and ratings removed.

- There is NO reason to call the main DUNS numbers or even deal with the sales team. There is not even any good reason to go get your DUNS number as to simply letting it auto create. I know some folks need it for Government bidding, but plan it out a little ahead of time and get the number by auto creation and you will have taken a serious step at avoiding the front line sales people that is the main reason for most peoples complaints. 

- There are departments within DUNS who are not on commission and will never try to sell you a thing. 
You just need to go in the back door.

*Establishing your Business Credit*

1. ESTABLISH YOUR INITIAL ACCOUNTS - Once you have everything that is required to apply for credit you can go about establishing your initial accounts, Before you go applying everywhere think again. This is a slow process and your business credit might be flagged or even blocked if you apply to too many places at once, I recommend that you start out with 6 to 8 companies on NET30 terms. Below is a list of companies that offer NET30 Terms. Purchase a small initial order from each of these companies that approved you for NET30. Pay your invoice off well before its due date as that is how the D&B Paydex Score is calculated.

- Fedex\Kinkos
- Quill
- ULine
- Nebs
- Reliable
- Office Depot
- Gemplers
- Interstate Battery

2. WHAT IS A PAYDEX SCORE - A Paydex score is what D&B uses to tell potential creditors about your payment history and worthiness. It scales from a range from 0 to 100, with 100 being the best possible score. You are going to want to keep your Paydex score at or above 80. Paydex score are broken down as follows:

100 - Pays before invoice is generated
90 - Pays during discount period
80 - Pays when invoice is due
70 - Pays 15 days beyond terms
60 - Pays 22 days beyond terms
50 - Pays 30 days beyond terms
40 - Pays 60 days bevond terms
20 - Pays 90 days beyond terms
UN - Unavailable

3. WAIT FOR PAYDEX SCORE - In order to receive a Paydex score, you will need to have five tradelines reporting to D&B. Once you have five reporting you will be assigned your Paydex score. Now that you have this Paydex score you can move on to establishing revolving accounts, you can move on to Building Your Business Credit.

4. WHILE YOU WAIT - While you are waiting for your Paydex score to come through, you should also be able to open a revolving charge account at Staples without having your Paydex score. Most people get approved for $750 right off the bat. You will need to fax them in a copy of your phone bill however or at the minimum have your company listed in the 411.

5. GETTING A CELL PHONE - If you need cellular service for your business you should use you
business name and EIN to obtain a cellular phone, Most carriers will approve you for service without any deposits.

*Building Your Business Credit*

1. ESTABLISH MORE TRADE LINES - Now that you have your Paydex score you are going to want to begin applying to companies for revolving credit accounts. Remember, you DO NOT want to go on application sprees. You should start by applying to just a couple of companies.

2. CONTINUE YOUR BUILDING - Always wait a few weeks in between applying for more trade lines, and only do one or two at a time. Again it is important to stress that you should NEVER go on application sprees. This affects your business credit just as bad as if you were to do it with your personal credit.

3. REVOLVING CREDIT COMPANIES - Here is a list of companies that offer credit on revolving terms. Please remember that if they ask you for a personal guarantee to tell them you do not want to give it. Most times the company will just process the application without it.

- Staples
- Frys
- Walmart
- Lowes
- Home Depot
- Citi PP
- Dell

4. GAS CARDS - Here is a list of gas cards that you can get without a personal guarantee as well. These will come in handy when you are on the road for business.

- Conoco 76
- Shell
- Exxon/Mobile
- Chevron
- Sunoco

Good luck!


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## BoelenPython (Nov 22, 2007)

Hello.. This is what I do for a living and that info is a bit out dated.

Establishing business credit can be very helpful for a new business or a business that needs to grow.

The best way to use it for this business is being able to lease equipment and getting net terms for buying blank shirts, ink etc.

So you can get the shirts, inks etc, then sell them before you have to pay.

Obviously things dont always work as planned, so taking on credit can be risky, it still has to be paid even if your business doesnt make it.

I help new businesses get and build business credit, not just trade credit, but business lines of credit (cash) from banks. With a good personal credit score, almost anyone with a business can get a few hundred thousand in business lines of credit (cash) from banks, as well as get equipment, lease or buy a car, truck or delivery van etc.

Credit isnt for everyone and its always best to build your business with your own funds, safer and more rewarding.

If anyone needs advice, I am here free of charge to help.

Good luck.


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## NeoNiko (May 12, 2007)

The point of the post was to show everyone how to establish business credit WITHOUT using their personal credit. Anyone with excellent personal credit can get credit almost anywhere for almost anything. using your personal credit for business is a BAD deal since it can show up on your personal credit report and very difficult to get off.


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## BoelenPython (Nov 22, 2007)

I understand, but other than some gas cards, dept, office supply stores, there is no such thing as credit without using ur personal credit.

There are 3 cards out there, home depot mastercard, key bank, sams club discover that you can get without personal, but you have to have a very good business credit file that takes a few years to build.

So, there is some credit that one can get without personal, but its not cash. But if gas, office supplies and dept stores are what is needed, yes, by starting a legit business, and building a business credit file with some age, you can get a few things without personal..

relaible and nebs no longer report. fedex can take a year to report.. Uline and quill are fairly fast reporters. office depot and gemplers are pretty good also.

the revolving accounts listed some will take 1 year in business to get without personal, some even 2 years. And Citi PP, is a major credit card and is personal required.

The gas cards, some can be had without pretty fast, within 6 months of establishing business credit file.

as far as dnb paydex score, ive got most of mine with 3 trade lines reporting, so you can get a paydex within 3-6 months which will help with getting trade credit without personal.

good ino over all, I know who wrote this originally and its abit old, but much of the info is still good..

thanks for posting it neo.. It will point those interested in the right direction.

I do want to add, that it doesnt matter if you use ur personal to "pg" the account or credit, if you dont pay, they can still go after you and it can still go on ur personal credit. The 3 business credit agencies also sell the owners personal credit report together with the business credit report. Also, when you sign your name or submit an app online or in person, it says in fine print that the person submitting which is supposed to be owner/partner/officer and the business is jointly liable with the business for the debt.


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## badalou (Mar 19, 2006)

The one thing a person does not want to do beginning a business is to get in debt before they start a business. I find the info overkill and misleading. I think it gives people the impression that this is what you need to do in order to get in business. far from it. I run a business and owe nothing. I pay with my business credit card and pay at the end of the month. never carry anything over.


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## BoelenPython (Nov 22, 2007)

I also forgot, with some business credit, you can get dell computers and apple computers credit without personal. I have about 25K credit line with each company. Both to buy and lease.

as i said earlier and as badalou said, the best way is to start with ur own money, even good businesses fail sometimes and if you take out credit and the business fails, then you will still have to pay it...

So once you start, get customers, have sales etc, then if you need to grow, it may be the direction you could go, but I dont recommend it for everyone, and usually not to start with.. Too many variables. Things happen and its not fun when a business fails and you still have to pay its debt. On the other hand, ive seen people start with nothing and build in one case a billion dollar business with 250K in credit in the beginning.

good luck to everyone in 2008!


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## NeoNiko (May 12, 2007)

I do appologize if anyone reads this and thinks they need it to start a business. You don't. Nor do I say get loans, because those are bad. This was only for those who want credit like any other business out there, much like a credit card. Of course like a personal credit card you should ALWAYS pay the full amount at the end of a NET30/60 and billing cycles. At the most on a credit card, never have more than 10% of the full credit line as a balance....0 is best of course  And IF you can afford to pay for things out of your pocket or from revenue...DO IT!


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## mtmob (Apr 21, 2007)

Isnt the whole point of incorporating a business to limit liability. Excuse my question if it sounds ignorant but im trying to understand something lets say if i incorporate a business and it fails am i still liable for credit taken without personal gaurantee?


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## BoelenPython (Nov 22, 2007)

To answer your question: If its without a PG, then it depends on what you signed or submitted. If it said you are jointly liable for any debt, then yes you are liable, if it doesnt say that and you didnt give ur SS#, then generally you arent liable if business fails. They will still call you hundred times a day, try to sue you etc. They will give you a hard time, but without a PG you are ok.. Remember tho, you cant get real cc, loans etc without pg anyway, so all it would be was stores cards, gas cards, dell, etc. Good question!


It is, but unless you are a public company, there is no such thing as cash (loans, lines of credit major credit cards) business credit without a personal guarantee. So yes if you dont pay and business fails they will come after you personally.

The laws of a corp are to protect the officers from law suits from things, not from avoiding credit. 

There are some types of credit especially trade credit, net30 etc that arent attached to you other than having your name. The business owes it and not you, unless in the terms and conditions it says you and the business are jointly liable for any debt.

Most think that like you said, but credit just doesnt work that way or everyone would LLC or inc and take out a lot of credit and not pay it.. 

And if you arent a business then how are you getting business credit? Of course you dont need to be an LLC or corp, you can be a sole P, but to take out business credit without a business isnt legal. Again, you cant get a major credit card without it using ur personal credit, you can get store cards, gas cards, home depot, lowes etc. Just not a visa, mc, discover, amex.

Unless you have over 2million per year revenue and an office, then you can get amex corporate card without using ur SS#.



mtmob said:


> Isnt the whole point of incorporating a business to limit liability. Excuse my question if it sounds ignorant but im trying to understand something lets say if i incorporate a business and it fails am i still liable for credit taken without personal gaurantee?


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## mtmob (Apr 21, 2007)

Thanks for clarifying that for me your information has been very helpful.


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## badalou (Mar 19, 2006)

BoelenPython said:


> To answer your question: If its without a PG, then it depends on what you signed or submitted. If it said you are jointly liable for any debt, then yes you are liable, if it doesn't say that and you didn't give ur SS#, then generally you aren't liable if business fails. They will still call you hundred times a day, try to sue you etc. They will give you a hard time, but without a PG you are OK.. Remember tho, you cant get real cc, loans etc without pg anyway, so all it would be was stores cards, gas cards, dell, etc. Good question!
> 
> 
> It is, but unless you are a public company, there is no such thing as cash (loans, lines of credit major credit cards) business credit without a personal guarantee. So yes if you don't pay and business fails they will come after you personally.
> ...


This is confusing to me. Not sure what you are telling people. 
I am a sole proprietor and I have a American express business card and I don't do 2 million far from it. And my office is my home. I also have a visa business card as well. Where did you get that info. Because it is wrong.


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## Dannyboy (Dec 24, 2006)

BoelenPython said:


> To answer your question: If its without a PG, then it depends on what you signed or submitted. If it said you are jointly liable for any debt, then yes you are liable, if it doesnt say that and you didnt give ur SS#, then generally you arent liable if business fails. They will still call you hundred times a day, try to sue you etc. They will give you a hard time, but without a PG you are ok.. Remember tho, you cant get real cc, loans etc without pg anyway, so all it would be was stores cards, gas cards, dell, etc. Good question!
> 
> 
> It is, but unless you are a public company, there is no such thing as cash (loans, lines of credit major credit cards) business credit without a personal guarantee. So yes if you dont pay and business fails they will come after you personally.
> ...



I own another small company, we do 500K a year in sales. We have American Express and a Visa and we did not have to give our SS#, just our DUNS and bank/credit references. 
The only credit we secured where we had to go through a substantial amount of paperwork was for our business line of credit with our bank. 
That was my experience, maybe things have changed in the past 3 years.


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## BoelenPython (Nov 22, 2007)

you have an american express small business card, that needs a personal guarantee NOT an american express corporate card.. Big difference.

I assure you that if its a visa and american express then THEY are attached to ur SS#. They wont show up on ur personal reports unless you dont pay.. Call them, I can assure you that you personally guaranteed them.

Only as few cards will take business credit only and thats if you have a thick dnb file (15-20 Trade Lines.) 

The only amex you can get without a PG is the american express corporate card NOT small business card. Go to their website and check.

A lot of people think the same as you. BUt instead of telling me im wrong, you should call the company and ask.. If asyone doubts it, you dont have to take my word for it, call amex and ask them if they need ur SS# to apply for a small business card. Or call your bank and or credit company (bofa, wells fargo, citi, chase) and ask the same.

Another way to tell is if you applied less than 2 years ago, you can check ur personal credit report and there WILL be an inquiry on their (hard pull) from amex or whatever visa company it was. Amex almost always pulls experian. if there is an inquiry they have ur SS# and you PGed the account.

If you say you have a visa without PG, im sure the business world would love to hear which company its from, because they dont exist.

This is what I do every day. If you have a way to get a visa and amex without PG, please share... Please let us know which american express card it is and please let us know which visa it is.

Thanks.


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## BoelenPython (Nov 22, 2007)

Dannyboy and Badalou, when you two get a chance, can you update on the american express and visa please? You say i am WRONG, I would actually love to be wrong in this case, I just am not sure I am.

Like I said, Ive been doing this for 10 years and I dont know about these options unless the american express is corporate card and not small business which it cant be because you said you dont even have an EIN#.

Ive called american express to double check, and they said its not possible, maybe I got a rep that didnt know what they were talking about which happens a lot. I would ask that you double check with the companies.

And Visa, the only actual credit cards I know that dont need a SS# are home depot mastercard, keybank mastercard, smas club discover and all those require a business credit check and need to have a lot of business credit to be approved without SS#.

So a Visa, that would be like a white elephant and Im sure many thousands of business owners would love to find out about this.

I do appreciate your time.

Thanks again.


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## Buechee (Dec 22, 2005)

Now this is a post that we all can use. Thanks to all you guys for your input. It will help many of us here.


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## badalou (Mar 19, 2006)

I never said I didn't use my SS#. I have been doing business with wells fargo for 28 years.. You go in and show them your factious name documents and set up a business account and they will give you a business credit card. It was that easy.


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## Dannyboy (Dec 24, 2006)

BoelenPython said:


> Dannyboy and Badalou, when you two get a chance, can you update on the american express and visa please? You say i am WRONG, I would actually love to be wrong in this case, I just am not sure I am.
> 
> Like I said, Ive been doing this for 10 years and I dont know about these options unless the american express is corporate card and not small business which it cant be because you said you dont even have an EIN#.
> 
> ...


Boelen,
I did not say your wrong, just recalling my experience. And again I don't recall giving my SS# to them. As it has been a number of years and with the current financial situation in this country, I would not be surprised at all if your info is correct. 
We do have an EIN and a DUNS#. Also, we have one hell of an CPA who is exceptional at, umm, "bending numbers." 
Best way for anyone to find out is to call the CC company you are interested in and ask. Chalk it up as experience. 
Dannyboy


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## Girlzndollz (Oct 3, 2007)

I am registered as a sole proprietor and have an EIN. I did not go for the LLC as being the only one in the company, it gave me no extra protection from any liability, so I went along with the SP.

When I applied for my business Chase CC, I tried to do so without my personal credit being used. Nope, they were not having it. If I remember correctly, they were more interested in my SS# then my EIN#.

Before I called for that CC, I thought it would be a bit difficult to get since the business was new and had no credit history, but, apparently, my having almost 20 years of credit on file, made it a simple 5 minute process.

Another attempt to shield my personal life from my business venture gone awry. The card has my business name as well as my own name.

I think I remember I did not want to order one for my husband. 

The SBDC guy told me if I put my husband's name on the business, he wouldn't qualify for unemployment benefits, since technically he would not be unemployed should he lose his job, he was still 'employed' with my company. 

My original question leading to this comment was to find out what would happen if I build a successful company and die. Should I will it to my husband, or set something official up that it stays with the family, or would it be better to add his name to the company. 

I found that to be an interesting news piece. Needless to say, he is not on the company paperwork, and now I can't remember if I ordered him a CC. I wonder if that could come into play. This means anther call to SBDC, .

Good luck with all your credit needs. Mine are simple for this and my other business, but this post has my wondering if I need a Dun #. I would think not, but now I will read up more on it.

Good post, and my situation is most similar to Lou's, simple credit - done simply.


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## BoelenPython (Nov 22, 2007)

Lou, I was responding to the original poster that the only major business credit card that can be had without personal garnty that I knew of was the amex "corporate" card, which usually requires 2+MM in revenue and an actual office. The amex small business card that you probably have (so do I) is different and anyone with a business can have one if they have good enough fico, and it does require SS# and personal garnty.

Sorry, if I was confusing. I have most of my accounts with wells fargo, they have been great to me, all their stuff is also personal garnty, but easy to get, they already had all my info from personal accounts, so when I needed business cards, all I had to do was give business name and sign something, very easy.

I didnt mean to say anyone was wrong, just that as far as I knew it wasnt possible and if anyone had a business card without a personal garnty, I would love to know about it.

Thanks guys for responding.

Cheers




badalou said:


> This is confusing to me. Not sure what you are telling people.
> I am a sole proprietor and I have a American express business card and I don't do 2 million far from it. And my office is my home. I also have a visa business card as well. Where did you get that info. Because it is wrong.


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