Learn How to Build Credit with No Credit – We Show You How!

Can you build credit with no credit? It’s admittedly not easy but it’s far from impossible. Patience and creativity are your best friends.

Build Credit with No Credit

Company credit is credit in a company’s name. It doesn’t tie to a business owner’s consumer credit, not even if the owner is a sole proprietor and the sole employee of the small business.

Consequently, a business owner’s business and individual credit scores can be very different.

Build Credit with No Credit: The Advantages

Since business credit is independent from individual, it helps to safeguard a small business owner’s personal assets, in case of court action or business bankruptcy.

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

Another advantage is that even new ventures can do this. Going to a bank for a business loan can be a formula for frustration. But building company credit, when done right, is a plan for success.

Consumer credit scores are dependent on payments but also additional considerations like credit usage percentages.

But for small business credit, the scores really just depend on whether a small business pays its bills punctually.

Build Credit with No Credit: The Process

Growing company credit is a process, and it does not happen without effort. A small business must actively work to build business credit.

Having said that, it can be done readily and quickly, and it is much quicker than developing individual credit scores.

Vendors are a big component of this process.

Doing the steps out of sequence will lead to repetitive denials. Nobody can start at the top with company 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.

Build Credit with No Credit: Start with Company Fundability

A small business has to be fundable to lenders and vendors.

For this reason, a company will need a professional-looking website and email address. And it needs to have website hosting from a merchant like GoDaddy.

Also, company telephone and fax numbers need to have a listing on ListYourself.net.

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

A small business will also need a bank account devoted purely to it, and it must have every one of the licenses necessary for running.

Licenses

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

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

Learn more here and get started toward growing company credit.

Build Credit with No Credit and Deal with the IRS

Visit the Internal Revenue Service website and acquire an EIN for the small 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 more than likely want to switch to a kind of corporation or an LLC.

This is in order to decrease risk. And it will make the most of tax benefits.

A business entity will matter when it comes to tax obligations and liability in the event of a lawsuit. A sole proprietorship means the entrepreneur is it when it comes to liability and taxes. No one else is responsible.

Sole Proprietors Take Note

If you run a small business as a sole proprietor, then at the very 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 small business name. Therefore, you can wind up being personally responsible for all company financial obligations.

Additionally, according to the IRS, by having this structure there is a 1 in 7 probability of an IRS audit. There is a 1 in 50 possibility for corporations! Steer clear of confusion and drastically decrease the odds of an Internal Revenue Service audit as well.

Build Credit with No Credit: Getting Started

Start at the D&B web site and get a cost-free D-U-N-S number. A D-U-N-S number is how D&B gets a business into their system, to produce 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 web sites for the company. You can do this at fastcs.wpengine.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 manner, Experian and Equifax will have activity to report on.

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 start to obtain credit in the retail and cash credit tiers.

These sorts of accounts often 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 first off, what is trade credit? These trade lines are credit issuers who will give you starter credit when you have none now. Terms are in most cases Net 30, instead of revolving.

So, 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.

Details

Net 30 accounts need to be paid in full within 30 days. 60 accounts have to be paid in full 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 kick off your business credit profile the right way, you need 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 repay what you used, and the account is on report to Dun & Bradstreet, Experian, or Equifax.

Vendor Credit Tier – It Makes Sense

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 want 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 have to apply more than one time to these vendors. So, this is to demonstrate you are trustworthy and will pay in a timely manner. Here are some stellar choices from us: https://oldcs.creditsuite.com/blog/5-vendor-accounts-that-build-your-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 progress to the retail credit tier. These are companies like Office Depot and Staples.

Just use your Social Security Number 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 instance is Lowe’s. They report to D&B, Equifax and Business Experian. They want to see a D-U-N-S and a PAYDEX score of 78 or better.

Fleet Credit Tier

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 buy fuel, and to repair, and maintain vehicles. Only use your SSN and date of birth on these applications for verification purposes. For credit checks and guarantees, make sure to apply using the company’s EIN.

One such example is Shell. They report to D&B and Business Experian. They want to see a PAYDEX Score of 78 or higher and a 411 company phone listing.

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

Learn more here and get started toward growing company credit.

Cash Credit Tier

Have you been responsibly handling the credit you’ve gotten up to this point? Then move to the cash credit tier. These are service providers such as Visa and MasterCard. Just 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 company.

These are service providers such as Walmart and Dell, and also Home Depot, BP, and Racetrac. These are normally MasterCard credit cards. If you have 14 trade accounts reporting, then these are in reach.

Learn more here and get started toward growing company credit.

Build Credit with No Credit and Monitor Your Business Credit

Know what is happening with your credit. Make sure it is being reported and attend to any inaccuracies as soon as possible. Get in the practice of checking 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: fastcs.wpengine.com/monitoring.

At Equifax, you can monitor your account at: www.equifax.com/business/business-credit-monitor-small-business. Equifax costs about $19.99.

Update Your Data

Update the details if there are errors or the information 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. So for Equifax, go here: www.equifax.com/business/small-business.

Build Credit with No Credit and Fix Your Business Credit

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

Get your business’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 errors normally means you send 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 send copies and retain the originals.

Fixing credit report mistakes also means you specifically spell out any charges you challenge. 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 small business’s Equifax report by following the instructions here: www.equifax.com/small-business-faqs/#Dispute-FAQs.

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

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

A Word about How to Build Credit with No Credit

Always use credit responsibly! Don’t borrow beyond what you can pay back. Keep track of balances and deadlines for repayments. Paying on schedule and fully will do more to raise business credit scores than virtually anything else.

Building business credit pays. Good business credit scores help a company get loans. Your lending institution knows the small business can pay its debts. They recognize the small business is authentic.

The company’s EIN connects to high scores and loan providers won’t feel the need to request a personal guarantee.

Build Credit with No Credit: Takeaways

Business credit is an asset which can help your business for many years to come. Learn more here and get started toward establishing small business credit.