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Did you try to open business accounts for your start-up when you were forming it? It can be maddening for entrepreneurs trying to build business credit. In most cases, you can’t open accounts without providing your Social Security Number (SSN) and a personal guarantee. You know you want to keep your business credit separate from your personal credit. However, the economic wipe-out during the past two years has caused many individuals to create a company because they’re in financial free-fall, they can’t find employment, and starting their own business provides hope for the future. After extensive research, I’ve found major companies, which are likely to open an account for you, using only your Employer Identification Number (EIN).
This is the fourth installment in this series, Build Awesome Business Credit in 2010. Part 1 provides the foundation you need to establish before building credit. In Part 2, the initial requirements to develop a credit base are laid out for you. And the first steps toward opening major accounts are discussed in Part 3. After you have established your company’s platform for credit-building, here are four reputable companies, where you should be able to open accounts without a personal guarantee.
Do not apply for accounts with all of these vendors at once. Open one account. Be sure the business has your DUNS number so they can easily report your credit use to Dun & Bradstreet (D&B). Use the first account, pay your balance immediately, and begin to watch your D&B credit record. There is no charge to look at your D&B file, and you do not need to purchase any products to build your credit rating and see your file. You can view it as often as you want. After you see activity posted to your D&B file for your first account, open the next account. When you see the second account has posted usage information, open the third account. Continue that process until you have five open accounts reporting to D&B. Then, use all of the accounts every month. Always pay your balances immediately to rapidly drive up your Paydex score. Do this for six months after the last account is open. After six months of impeccable account histories, you’ll be ready for the next level of credit development.
Uline is an optimal source for packaging, shipping, and many office supplies.
Signing up for a company account is easy. Be sure to list yourself as CEO, provide a business email address, and business phone number. They allow Net 30 terms on purchases up to a few hundred dollars for a new business. Net 30 means your bill is due by 30 days after the invoice date. It’s fine to charge low cost items to your account and pay for them immediately. You don’t need to spend a lot of money. It’s important to use the account monthly.
FedEx will allow you to open an account as a young company if you sign up for an automatic payment system, which reduces the risk for FedEx. A couple of months ago, you could select your billing and payment options online as you opened a FedEx account. Now you will need to call their account services department. Unfortunately, they send all callers through one system: 800.463.3339. Rather than listen to the many options, which won’t apply to you, press zero when the recording starts. You’ll skip minutes of intervening steps. Tell the Customer Service rep that you need help opening a new business account. You will be transferred to someone who can help you. Review their automatic payment systems before you call so you’ll know what is best for you. They may require a credit card as back-up. As long as your primary billing method works, your credit card will not be accessed.
Remember, your goal is to build your business credit rating so you can qualify for additional business accounts, which require evidence of your business credit history before they will extend credit without your Social Security Number and personal guarantee. You may be opening accounts that aren’t perfect for your business. Purchase what you can from them. Small amounts each month will build your history. You are creating a track record as a business that uses credit responsibly.
In the next column, I’ll provide information you need to qualify for small business loans.