Posted by michaela-CA on July 19, 2008 at 11:28:17:
Tom,
it takes 7 years from ‘last activity’ to fall off your account. Since you’re making payments on them they will stay on. It really sucks, that you’re basically being punished for paying, but unfortunately that’s how their scoring model works. So, someone that stopped paying 5 years ago will have this off their report in 2 years. If they then started to make payments they’d start the clock over.
Michaela
Trying to Establish Business Lines of Credit - Posted by Tom
Posted by Tom on July 16, 2008 at 11:07:32:
Hi Tom,
I had a quick question…
I just applied for a Staples and Office Depot business card online and was advised on both counts that “We were unable to process your application with the information you provided.” I called the 1800# provided and was advised I needed to fax in two items.
1)Business License or Article of Organization.
2)Personal guarantee form
I already formed the LLC on Monday so I have the Articles. I was under the impression that Trade Credit did not require a personal credit check.
My Fico score are as follows:
Equifax - 690
TransUnion - 644
Experian - 653
I have already been declined by Advanta. I applied thinking my Equifax was good enough. I neglected to pull all 3 reports and Advanta checked the TransUnion score)
What should I do at this point? I want to start Trade Credit and I was under the impression that Trade Credit did not require personal credit guarantees.
Thanks,
Tom
Re: Trying to Establish Business Lines of Credit - Posted by Jimbo
Posted by Jimbo on July 20, 2008 at 23:48:30:
Be careful of all the mythology surrounding business credit. Unless you’ve built a long standing relationship with a business lender who knows you financial standing (via lots of paperwork), your business credit will largely be based on your personal credit worthiness.
Yes, it’s possible to obtain small trade lines from various vendors (Office Depot, Grainger, Home Depot, etc.) But these lines will not be big. And they are not open lines of credit that you’ll be able to use for working capital (cash for your business).
And, the business lines of credit, such as all the Amex Open for Business and others are, in my opinion, consumer credit cards that don’t show their limits or payment history on your personal credit report.
Now, the D&B Paydex score is a very tricky thing. I, at one time, followed the advice of the business credit forums and opened up various trade lines at the recommended issues. However, the reporting to D&B was spotty at best.
I remember opening up my Office Depot business card with a $2500 limit, no Personal Guarantee (PG). I then charged several laptops right before the end of my billing cycle to get my high limit up on the card. I then returned the unopened laptops to the store. They almost denied my return! And, that silly $2300 charge never did show up on my D&B report. It was a lot of work for nothing.
I’d call up my trade line vendors to understand who reported to D&B and what they reported. Yup, they reported to D&B alright, but only derogatory infomation, not payment history. That didn’t do me much good.
I finally gave up on building business credit and decided to just build my business instead. It’s a much better plan.
Jimbo
If Staples Turned You Down . . . - Posted by rae mitchell
Posted by rae mitchell on July 19, 2008 at 09:38:18:
Then something is wrong.
Do you have an established Dun & Bradstreet file? (While not necessarily needed to get a Staples account, it is most likely checked for Office Depot) Is your business listed in BUSINESS 411? (Done by obtaining any type of business phone line that is NOT VOIP, including a remote-call forwarding type of service. Call local phone company and say “I need to get my business listed in 411, what’s the least expensive way to do this?” and let them sell you on your options.)
Many of the “lower hanging fruit” of trade credit grantors pick up the phone, dial the 411 exchange for your area code, and then ask for the phone listing for your business. No listing = no credit, no matter how high your FICO is…because they don’t check it. The assumption is that any “legitimate” business has a phone in the company name. NOT a cell phone, a regular landline phone. So even if it is a creditor that would normally check your FICO, if you don’t have the 411 listing they just stop checking and issue the denial right out of the gate.
Some of the information you have gotten is WRONG! - Posted by StevenS(CPA)
Posted by StevenS(CPA) on July 18, 2008 at 10:36:16:
This is not the best board for obtaining business credit I would check out creditboards.com to get up to date and accurate information.
There are many reasons why Staples wouldn’t give you a business account.
Are you listed on D&B and do you have three trade references listed under your business name?
Do you have a real business address and business phone number listed on 411?
Like I said there are a number of reasons why you were denied. Staples is not the first business I would try to obtain corporate credit from if I were starting out.
But check out creditoards.com and you will learn what you need to do.
Re: Trying to Establish Business Lines of Credit - Posted by Edwin
Posted by Edwin on July 17, 2008 at 13:05:35:
I would forget about the idea of trying to get a credit line without a personal guarantee. I know it sounds sexy and “clever” to be able to have something like that, but think about it: What’s in it for the bank to offer a loan with no personal guarantee? Not much, I think. Besides, if you operate honestly and competently, you should never have to encounter a debt that you’re unable to pay.
Re: Trying to Establish Business Lines of Credit - Posted by michaela-CA
Posted by michaela-CA on July 17, 2008 at 09:47:00:
Tom,
if you go to www.creditboards.com there’s a discussion forum that’s whole devoted to business credit.
For example, I’m doing some business with the government, so I got a D&B number within 24 hours for free without question.
Granted, your company is extremely new, so you may need a little seasoning.
But let’s say you have some cash in the bank in an account under your company name. You could approach your bank, asking for a loan and at the same time offer to buy a CD in the exact same amount as collateral . They have no risk and you make the payments. yes, you’ll have some cost - the spread between the cost of your loan and what you get for the CD - but they will report to the CRAs and you get some positive credit. Once you have that you might be able to get some other tradelines.
Michaela
Re:Personal Guarantees - Posted by JT-IN
Posted by JT-IN on July 16, 2008 at 16:12:46:
Tom:
Almost any type of credit or tradeline for an entity will require a pers guarantee… even if the entitiy is NOT new. The old days have been gone for a long, long time… not now unless you get very established… but guaranteee still required in most cases.
Too may lenders have gotten burned by the protection of an entity and the shareholder skated away… so new rules.
There is such a thing as “renting one’s credit account or tradeline”. There are companies that actually marry together individuals with good credit and those with low scores. For a fee, the company with have the low credit score individual added to the acct or accts of one who has excellent credit. This will immediatel boost yor credit score.
The practice is frowned on by banks and credit companies, but last I knew it was still legal to do… but may not be for much longer. What I would suggest, rather than renting a credit line is IF you have parents or siblings with great credit then they could add you to their acct… now you won’t be able to charge anything or do anything with the acct but the mere fact of the acct paid on time will show up on your credit file as a good trade line and your score will improve rapidly. You wouldn’t want to be added to someone’s acct that carries high balances, relative to their overall credit limit… You may want to research this pactice by googling “rent credit account” or other similar phrases… again, I am not certain that it is still legal, and won’t be forever based on the heat it has brought.
Just another idea for you… then IF you can improve that score you will be issued tradelines, regardless of whether you must guarantee or not… which is a foregone conclusion.
JT-IN
Now that’s good advice! - Posted by Natalie-VA
Posted by Natalie-VA on July 21, 2008 at 11:42:52:
“I finally gave up on building business credit and decided to just build my business instead. It’s a much better plan.”
I Just Realized Something! (Good News!?!?!) - Posted by rae mitchell
Posted by rae mitchell on July 19, 2008 at 10:15:17:
You may not have been turned down by Staples! For some reason their computer system for approvals is “finicky”. Be sure to submit the items they asked for via fax. It may come back as an approval in a few days in their system once they have the additional documentation they asked for.
Oh yeah! Cards may just show up after that, even if the system initially says you’ve been declined. Don’t know why, but it is something that has happened to some people over at Creditboards…they thought they were denied, sent in the extra paperwork, and got cards in the mail.
One more reason to head on over to the Business Credit subsection of Creditboards . . . to know what to expect and what has happened to other people . . . which can sometimes put your mind at ease.
Re: If Staples Turned You Down . . . - Posted by Tom
Posted by Tom on July 19, 2008 at 09:58:14:
Hi Rae,
Thank you for responding to my post.
I do have a DUNS number. It was free. I got it in 24 hours by applying on their website. This is odd because the site states it generally takes 30 days.
I did get a remote forwarding number that forwards to a my Ring Central 800#. I set up the Ring Central account first because it can accept faxes and can be setup as a PBX. I then heard about the 411 listing, contacted Ring Central and they stated they did not list with 411. I called AT&T to get the call forwarding number and requested the number be added to 411. AT&T states this may take 5-7 business days to update.
I also checked with my Secretary of States and my LLC is not listed yet. I need to call back every week until it shows up… just in case vendors are using this as well.
I have since applied and gotten business accounts at Quill.com and NEBS.com. I am working towards getting 5 trade accounts reporting to get my DUNS score. I am shooting for a score of 80 within 60 days.
I am also working on clearing up a few items on my credit report to strengthen my personal FICO. Does anyone know of any good/inexpensive resource for removing items on personal credit?
Thanks again for the response,
Tom
Re: Trying to Establish Business Lines of Credit - Posted by Tom
Posted by Tom on July 17, 2008 at 10:05:29:
Hi Michaela,
Thank you for responding to my post.
I have Donna Fox’s book which outlines this method. She recommends leveraging the loan to get a CD at 2nd bank. She states to do this at 3 banks to get 3 positive credit reporting.
I may have to resort to this method.
Thanks again for the advice.
Tom
Renting Tradelines Costs You FICO Points…! - Posted by rae mitchell
Posted by rae mitchell on July 19, 2008 at 09:57:35:
The credit bureaus are very wise to the “immediate score boost” game, and have taken steps to hurt those who would try that. For instance, they have slowly started to implement what the industry calls “FICO 2008”. This newer FICO rating system specifically takes away points for authorized users trying to boost their credit score quickly. It’s something they’ve planned on for some time but are implementing slowly so the “immediate boost” days are numbered.
The solution that works better is to take on a “credit partner” who becomes a part of your corporate entity and as part of the agreement you have with them understands that their credit will be used to obtain credit lines. Why would someone do that? If you have excellent credit just sitting there and lots of money going out to pay those bills but little time to pursue deals and someone approached you about using your credit and paying you a part of the profit just to sign your name and sit back and get extra money you would not get (what to pay and how the benefits are structured is negotiable), would it not make sense to at least take a look at the deal?
It is much better to clean up your own credit while working with a credit partner who understands their credit is on the hook and is willing to sign anyway. Doing it this way allows you to get the best rates now while putting yourself in the position to not need to pay someone else a part of the deal forever. And yes, there are credit angels out there looking to maximize the use of their credit for their own profit. How to find them? Entire courses have been written on it.
Google “credit partner”, search Youtube for “credit partner” (take what comes up in Youtube with a grain of salt or two as it seems to be the place where all the high-priced pitchsters drop videos trying to sell you their stuff), and let the research begin.
As another poster said, Creditboards dot com is an excellent source of info. However, don’t go searching there late at night. You’ll be there reading helpful stuff for hours and before you know it the sun will be coming up and you will have missed out on getting sleep! But there is enough info there at that site to tell you how to get business credit without paying some guru a fortune. And it’s all there, free for the searching.
Re:Personal Guarantees - Posted by Tom
Posted by Tom on July 17, 2008 at 05:58:16:
Hey JT,
Thanks for all the great info.
Good That You’re Getting Number Added . . . - Posted by rae mitchell
Posted by rae mitchell on July 19, 2008 at 10:10:33:
to 411. I always hate waiting for the phone companies to get it listed, they always seemed to take their sweet time for something that is basically flipping a digital switch in their computer system!
Head on over to Creditboards and look for the sub-forum called “business credit”. I didn’t have that wonderful resource when I first started, so I ended up paying a guru major money to learn how the system works. Thank goodness I paid him when I did; his rates have gone up from the $3k I paid to over $100k now! And yes, the info is worth every penny! But at $100k, I doubt I would have signed up even if I’d HAD the money! (Scam factor would have kicked in, as back when I signed up to learn I didn’t know him so I didn’t know how good he was. I’m quite sure I would have went running in the opposite direction.)
Do you have a Sam’s Club membership? If not, get one…in the name of your business. Take your corporate organizational papers (LLC articles, etc) with you when you join (on a week day, when it’s their slow period before noon) and apply for the business credit account there when you join. They are fairly easy to get, and they report to D&B, so it will get you closer to your 80 Paydex score. And let’s face it, who doesn’t need some type of equipment that they have for a real estate business? Copier paper, ink cartridges, fax machines, computer equipment, ladders and other supplies for rehab, etc? Use the account, pay it quickly, and you’ll be golden.
Re: Good That You’re Getting Number Added . . . - Posted by Tom
Posted by Tom on July 19, 2008 at 11:04:09:
Hi Rae,
Thanks for responding so quickly and with GREAT information.
Sam’s Club membership? Perfect! Do you know if this will work at Costco? I already have a personal membership but I can always apply for a business one.
A quick question about my credit.
There are currently 5-6 items that are “Calif Student Aid Comm” with “Payment after charge off/collection”. I only have a total of 9 accounts on my report so these look REALLY bad. These are from 1/2002. I’m currently paying them off with a consolidation loan through the Department of education. Loan amount is about $20,000.
Is there a way to remove these items? How long does it take to “fall” off my report?
Thanks in advance,
Tom
Costco Works! - Posted by rae mitchell
Posted by rae mitchell on July 19, 2008 at 21:00:54:
You may actually want to get an ADDITIONAL membership at Costco. Or convert the one you currently have, your choice. But the last time I checked, Costco had Am/Ex backing their card, which is something you’re not ready for just yet…get that Paydex score to 80 first.
The main reason I like Sam’s Club is something I did many years ago. I had numerous businesses set up, and I was trying to build credit quickly. So I got all the businesses to the point that they were ready to go…D&B file set up, 411 listing, etc…and then I joined Sam’s and applied for biz credit multiple times, each for a different business. All in the same day! By physically going from store to store, I was able to obtain just under $22,000 worth of credit in one day via the various companies (all legit companies, nothing fraudulent). Each time I applied they pulled a personal credit report, but because it was all done on the same day and pulled by the same creditor the credit bureaus considered it ONE inquiry.
I do NOT recommend that method, however, as it has its own set of problems and the benefits of the credit obtained did NOT outweigh the negatives. Basically it is easier to get each account you might possibly want from every creditor you want it from once and then launch a fax campaign to obtain duplicate accounts for a second (and third and fourth, etc.) business 46 days later.
The unique thing is, a corporation can guarantee credit for a sister company just like an individual can. Meaning, YOU the person guarantees the first business’ credit. The parent or sister company guarantees the next business’ credit.
It’s sometimes faster to build credit by pursuing smaller sized accounts and then requesting additional separate accounts as you need them than it is to go after larger accounts up front in the beginning. Also, you can always go back to the creditor and request an increase for each account (separate phone calls is best). Has something to do with the limits of the actual reviewer making the decision moreso than the entity you are pursuing biz credit for. Also, if you get pre-approval-type credit aps in the mail and you send them in and everything is as it should be then certain limits are automatically generated by a computer that spits out a yes or no and automatically orders and mails cards to your business. Go over the limits and you are subject to review by an underwriter. While underwriter review is not necessarily a bad thing, it’s human intervention and humans wake up having a bad day, have quirks, etc, that computers do not have. Give me automatic “yes” decisions over humans any day of the week!
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