How to apply for business credit without using personal credit

How do you build business credit? 

Can you get approved for credit lines at places like Target and Walmart, WITHOUT it being based on your personal credit? 

SHOULD you even be using business credit?  

Would you like to understand it so you can add those services to your existing credit repair business as another stream of revenue? 

If you’ve ever asked those questions and feel like business credit is a mystery and you wanna unlock the secrets to leveraging it within your business, this episode has all the answers!

Business Credit 101

If you’ve listened to my podcast before, chances are you know I believe in having a bootstrappers mindset to building your business. 

Bootstrapping means, earn a little, spend a little, earn a little more, spend a little more and pretty soon you’ll become profitable WITHOUT carrying a whole bunch of debt! 

BUT, there’s something to be said for understanding business credit and leveraging it as a service so you can help your clients if they need it and use that knowledge to add another revenue stream to your existing business.  

That’s why, in today’s episode I want to help you understand the ins and outs of business credit because as you may have already figured out… business credit is TOTALLY different with an entirely different set of rules than consumer credit. 

Why This Is Important

1. There really is no way to "repair" business credit because the Fair Credit Reporting Act only applies to consumer credit, not business credit.
2. Also, as you grow your business, you may find that many of your credit repair clients are also business owners, or they plan to start a business and they will look to you for help. 
3. And finally, much like your clients personal credit, their business’ credit score determines whether their company can be trusted when it comes to handling money. So it’s an incredibly important service and another way to increase your company’s revenue. 

Here’s What You Need to Know to Add Business Credit As a Service

1. Think of a business credit score as a gauge for the reputation of a company. This means it could affect your clients chances of future business relationships. If their business has a bad credit history, potential lenders or investors may not want to partner with them because it would be considered high risk.

Even if your client has an 850 personal credit score, they never want to take out a loan for their business in their personal name or social security number because they will become personally responsible for the business’ debt, it's a huge liability! 

1. There’s a good chance their business will hit hard times, and if they can’t pay their business loans on time, when set up correctly (without a personal guarantee) it won’t negatively affect their personal credit report.

Understand, creditors can go after personal assets if they used their personal credit to get the business loan. 

So, you gotta help teach your clients to build business credit, and use that, instead of your personal credit when funding a business venture.

1. The better the business credit is, the more opportunities your clients will have. If their business has excellent business credit, lenders will be more likely to loan money and they usually will offer much lower rates and fees. This is true of merchant accounts, credit cards, insurance and lines of credit that can serve as a safety net. 

So, let’s dive into exactly how your clients would go about building a healthy business credit profile.  

1. First, form a legal business entity like a corp or an LLC, this is the very first step in building business credit, because it separates you from your business. Then apply for a tax ID or an EIN, and then open a business bank account. 
2. Next, register the business with Dun and Bradstreet which is the biggest business credit bureau in the United states. They offer both free and paid options. You can decide what’s best by visiting DNB.com. And once registered, the business will be issued a PayDex score, which is their new "business" credit score.

Unlike your personal credit score, it’s on a scale from 1-100. Paydex scores are much like consumers FICO scores, but there are some key differences. 

Instead of reflecting your personal credit history, your paydex score determines your businesses creditworthiness - more specifically it reflects how promptly your business pays your creditors and suppliers and the performance of your payment history. 

Lenders will look at their Paydex scores to determine if they will lend to that business and their Paydex score will indicate how reliably their business meets their debt agreements.  

1. One tip you can tell your clients who are starting from scratch and want to build a solid Paydex score is to get vendors first and make sure they are vendors that report to Dun and Bradstreet. There are a bunch that will offer you credit without a personal credit check. 

Just to name a few: 

Try applying with Quill Office Supplies for all your office needs. Paper, ink, pens and thousands of other items are available at Quill, and they will approve without a personal credit check and they report to Dunn and Bradstreet. Staples and Office Depot also generally offer net 30 accounts and they also report to Dun and Bradstreet. 

If you need shipping supplies, try Uline. They also report to Dun and Bradstreet and will often give new businesses a line of credit even if you're a brand new business with no existing business credit. 

For tools, try Grainger Outdoors. 

Also, Wells Fargo offers a secured business credit card that reports to Dun and Bradstreet, as well.  

Even Amazon has a net 30 account available for new businesses to start building their Paydex. 

1. Now, remember - when opening business accounts make sure you don't attach them to your personal credit. 

You can do this by simply leaving your social security number blank if it is asked for. Most vendors will be ok with this. 

Sometimes if you are filling out an application online, your social is required so the only way to avoid this is to request a printed application, which you can fill out manually and mail in. 

If the vendor requires your social security number, then DON’T APPLY. Go somewhere else!

It's very important to keep your business and personal liabilities separate. 

1. Next, look into the Dun and Bradstreet Credit Builder program. It speeds up getting your DUNS number, it allows you to monitor your business credit and most importantly you can take trade references you already have and add them to your Dun and Bradstreet report. 

Now, here’s the great part: Once you have 5 accounts reporting to Dun and Bradstreet you can get approved for accounts with companies like Walmart, Sears, Best Buy, Dell, Apple, Sam's Club, Lowes, Target, Costco and Chevron WITHOUT a personal guarantee or consumer credit check. 

Now that you have a basic understanding on how your clients can get their business credit started, here are a few expert tips to help them really build it.

1. First, they need to actually use your business credit accounts so they don’t go dormant. If you don't use them, the vendors will stop reporting. Try to make a purchase every 30-60 days on each account.
2. Secondly, unlike personal credit history where as long as they pay before the due date you're good, Paydex scores your payment history a little differently. The faster you pay off the balance, the better the impact to your Paydex score. So, pay your bills as fast as possible - preferably right away long before the due date.
3. Finally, to build your paydex score faster, try to use the business accounts as much as possible and buy everything using business credit. Pay your bills with your business line of credit, pay for fuel, food and any expenses that you would normally pay with your personal credit or cash, instead use your business credit accounts to build your Paydex score. 

Building business credit is not nearly as difficult as it seems and now you can leverage this in your business by being able to walk your clients through the process and help them to build their business credit profile as an additional service you offer. 

And, if you’re just starting and you want us to hold you by the hand as you launch your very own credit repair business in just a couple of weeks - I wanna invite you to join our upcoming Credit Hero Challenge! We’ve got another one starting in a few days so grab your spot today at creditherochallenge.com

Be sure to subscribe on your favorite platform below!

Topics: Podcast

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