How to Establish Business Credit Without Personal Credit:

[Alaskan Assassin]

Step1: Separate your personal credit from your business credit. This protects your personal finances if the business fails, but it also protects the business just in case there are problems with your personal credit. Incorporate your business or form an LLC to establish business credit without a personal credit check. Sole proprietors and partnerships by definition are personally liable for the business, so you'll want to steer clear of those options.

Step2: Establish business identity. You need a Federal EIN for your business as well as separate bank accounts that are under the legal name of your business. Make sure you have all necessary licenses and permits and designate a separate phone line solely for your business. All these things give your business more clout when creditors are reviewing your business potential.

Step3: Open business credit files with the credit reporting agencies that are designed for businesses. Dun & Bradstreet, Experian and Business Credit USA report on business credit in ways similar to how companies track your personal credit. Once you have credit established for your business, you can report your payment history to these agencies to build your credit score.

Step4: Obtain business credit cards that are not personally linked to you. You might also contact a few vendors and suppliers and ask them to extend a small amount of credit to your business. Pay your bills on time and you'll soon have solid relationships with these partners

[ilyabodner]

Business Credit is Separate from Personal Credit

Many small business owners are not aware that they can get business-based financing that is unrelated to their personal credit history. In this case, their personal credit is not considered. The majority of lenders and businesses in the U.S. rely on the Paydex score reports prepared by Dun & Bradstreet to check the credit worthiness of a business.

Your small business Paydex score is the business equivalent to your personal FICO score, or personal credit score. As a small business owner you need to know what this number is. You also need to be aware of how to increase your Paydex score. Unlike your personal FICO score which involves automatic reporting, your business credit history must be manually submitted to Dun & Bradstreet.

In this blog, we discuss the following:

the benefits of having an excellent Paydex score
how to build a Paydex score
how to manage your business finances
how to correctly administrate your small business


Sincerely,


Ilya Bodner
Small Business Owner
Initial Underwriting

[D9r]

This might make a good 'sticky topic', since it's such a popular question.
Thanks for the info!

[NightStar]

Thanks for the info, and I have added it as a sticky post.

[downrollings]

At the point an individual with a social security number accepts their first job or applies for their first credit card, a credit profile is started with the personal credit reporting agencies. This profile, otherwise known as a credit report, is added to with every credit inquiry, credit application submitted, change of address and job change. The information is typically reported to the credit bureaus by those who are issuing credit. Eventually, the credit report becomes a statement of an individual's ability to pay back a debt.

In some cases, the same is true for businesses. When a business issues another business credit, it's referred to as trade credit. Trade, or business, credit is the single largest source of lending in the world.

Information about trade credit transactions is gathered by the business credit bureaus to create your business credit report using your business name, address and federal tax identification number (FIN), also known as an employer identification number (EIN), which you get from the IRS. The business credit bureaus use this compiled data to generate a report about your company's business credit transactions. In many cases, those issuing credit to you will rely on your business credit report to determine if they want to grant you credit and how much credit they'll give.

The major business credit bureaus that compile and provide copies of the reports are:

* Dun & Bradstreet
* Experian Business
* Equifax Business
* Business Credit USA

[Alaskan Assassin]

downrollings:::



Thanks for the info good read

[NightStar]

I am currently signed up with the local college to learn business and establish a business plan it is going to take me a bit. I am also working with DOORS to get assistance getting business started. Yesterday I took my book to a publisher and will see if I can get funding for that as well. My personal credit is trashed for another year. After 2010 I will try to apply for a loan. Maybe you guys and girls might have an idea of specific companies that give out credit without checking personal credit that you can recommend?

[D9r]

Maybe you guys and girls might have an idea of specific companies that give out credit without checking personal credit that you can recommend?

I read that when you're starting out with no business credit, begin building a credit profile for the business by applying for credit with suppliers like Office Depot, Office Max, Staples, etc. They supposedly will give you small credit lines of about $300 each. Use these to establish a good payment record for 6 months or so, then apply for larger accounts elsewhere. I have no personal experience with this, but it sounds reasonable.

[D9r]

In a related thread, "Is there a biz card not tied to personal credit?",

There is an ocean of business cards that will not tie to your personal credit or social security number but you have to set your business foundation correctly to get to it. Is your small business incorporated or a limited liability company. You need to be one of those.

Here are the 7 steps you need as your foundation to really get the max out of business credit that is not tied to a person. An LLC or corp is its own legal entity.

1. Corporation or LLC (look at website for secretary of state in state you live)
2. Tax ID (corporate because LLC is form of corporation)
3. Business License from city hall
4. Listed business phone with directory assistance
5. Business Bank Account
6. Fax Line
7. Dunns #

If you have all of these you are ready to start getting business credit. Even then you cannot just jump out and get a Visa or MasterCard. They want to know other creditors trusted you with money first. I've written an e-book that takes you through all the steps and gives you the companies that will give you credit on a signature without referencing your ssn.

What you wasnt is definitely possible. It just takes a little knowledge, patience, and persistence.

Kevin

and

A true business credit card is a line of credit that is taken in the name of the business, under the business' credit. Activity, whether good or bad, is reflected on your business' credit report through D&B and other financial institutions, and the liability for any debts incurred and bills owed is with the business.However, some companies out there offer "business" credit cards which they require a person guarantee for. These institutions will often ask for a personal guarantee, and will almost always ask for a social security number from the person applying for the card. If this is the case, the credit card is not a business credit card, but is simply a personal credit card which is used for the business. The business is not liable for bills and debts - you are.When applying for a credit card for your business, watch out for areas asking for your SSN (and not your TaxID or EIN) and be wary of any credit card that asks for a personal guarantee. By ensuring that your credit card is in the name of your business, you can help to build your business' credit, while avoiding creating problems with your own.

Many companies offer a list of credit cards that are issued under the business name only. Those lists typically run $300-$900, depending on the quality of the information inquiring. I would suggest starting your search online via google or yahoo. Search for "strong business credit" (just like that in quotes) to find services that sell the information.

Good luck,

Ilya Bodner
Small Business Owner
Initial Underwriting Group

[D9r]

BusinessCreditSuccess.com wrote:

If you are operating as a sole proprietor or Limited Liability Company, it is difficult to separate your personal and business credit. A corporation is a much better structure to build a completely independent business credit report.
http://businesscreditsuccess.com/articles_files_2.html

But kevin5x5 wrote:

you have to set your business (as) incorporated or a limited liability company. You need to be one of those.

Is it possible to build a separate credit profile for an LLC? It sounds like it might be easier for a corporation. But if a business is already organized as an LLC, can it build an independant credit profile without reorganizing as a corporation?

(edit: Since first posting this question on July 24, I've noticed many "large" businesses organized as LLCs: Chase Home Finance LLC and Chrysler Group LLC are two. So I'm guessing that an LLC is equally as good as a Corp when establishing business credit.)

[tamekariley]

I'm just getting started in business and my company is an LLC. How much history do lenders look at when looking at you for credit? I know you mentioned places where small amounts of credit can be obtained, but about how long of a payment history do I need to have established with the smaller lines of credit before going after the larger ones? Does the dollar amount you can expect depend on how many small accounts you have or does it hurt to have a lot of little one as you try to work your way up to the larger ones?

Tameka Riley

[Alaskan Assassin]

Tameka Riley:::



The amount of credit you get differs with each bank...Banks mostly look for good to excellent credit before approving they also look at your financials and much more..Business credit is harder to obtain in this day in age since we had a big melt down with the banks..I would try to obtain credit from your local bank or an office supply store just to get you started then after that you would need to build at least a few years of good credit history then try for more credit with other banks or vendors..getting a big credit limit is also based on how much you make. If you have any other questions i would be happy to answer them for you.

I'm just getting started in business and my company is an LLC. How much history do lenders look at when looking at you for credit? I know you mentioned places where small amounts of credit can be obtained, but about how long of a payment history do I need to have established with the smaller lines of credit before going after the larger ones? Does the dollar amount you can expect depend on how many small accounts you have or does it hurt to have a lot of little one as you try to work your way up to the larger ones?

Tameka Riley

[tamekariley]

That's great advice. Being brand new to business my "financials" are on the way- but it doesn't sound like that matters as much with the smaller office supply stores as it does with the larger financial institutions. I just don't want them even thinking about my personal financial/credit history when looking at my company. Being an LLC, yet with no financial/credit history whatsoever, I'm hoping this will be possible; even in the smaller supply stores.

Thanks for the great advice and thank you so much for your post on the business credit bureaus, I didn't really know how they differed from the persoonal reporting agencies.

Genuinely,
Tameka Riley

[ghanshyam]

how to establish credit without