topic Re: Are Net 30 accounts the only way to establish business credit? in Business Credit

Are Net 30 accounts the only way to establish business credit?

Peterparkyr — Sun, 13 Mar 2022 20:05:07 GMT

I have been building my business for a year, and plan to officially launch in 2-3 years. During this time period I would like to establish and build a positive business credit profile.

Simple question, I think: Are Net 30 accounts the only way to establish business credit? Are there other paths to establishing business credit?

Im in financial planning stages, and want to go down the right path - and at least know the options available.

Re: Are Net 30 accounts the only way to establish business credit?

Peterparkyr — Mon, 14 Mar 2022 18:59:53 GMT

Hey 👋,

Any insights?

Re: Are Net 30 accounts the only way to establish business credit?

pizzadude — Mon, 14 Mar 2022 19:30:53 GMT

Have you spent time reviewing this stickied thread yet? It provides a wealth of information on how to build biz credit.

Re: Are Net 30 accounts the only way to establish business credit?

Peterparkyr — Mon, 14 Mar 2022 20:23:14 GMT

Yes, I reviewed that thread, which is why I have the question. This thread implies that the only path to builidng business credit is to start with net 30 accounts. Also, all over the internet, this thread is in alignment with the general (how to build business credit in xxx steps). My question is really simple (just a yes or no actually).

Is the net 30 approach recommended for those not interested in using personal credit scores, or is it required if you want to build credit?

For additional context - I dont need those net30 products, it would be a waste of money for me - it makes no sense for me to open 6-8 net 30 accounts to buy stuff that I don't need.

Thanks for the reply

Re: Are Net 30 accounts the only way to establish business credit?

Peterparkyr — Mon, 14 Mar 2022 21:16:33 GMT

Thanks @myjourney !

This is the question that I was asking

http://ficoforums.myfico.com/t5/Business-Credit/Needing-some-help-on-new-LLC-and-getting-credit/m-p/3365637#M6823

It was just seeming really stupid to me that I had to apply for all of these net30 accounts and buy usless stuff that I dont need, when my credit is good enough to just open a credit card.

Re: Are Net 30 accounts the only way to establish business credit?

pizzadude — Mon, 14 Mar 2022 22:40:01 GMT

The short answer is Yes.

Longer answer, your business entity has to demonstrate the ability to borrow money and pay it back. Creditors will usually offer credit slowly and in low amounts, especially if you aren't interested in applying for any PG biz credit products and if you have no business credit history. That's the point of why people open these small net30 account for things like gas, office supplies, etc.. because it provides a positive tradline for biz credit reporting and becomes a building block for bigger limits and more tradelines.

Re: Are Net 30 accounts the only way to establish business credit?

WayneSki — Tue, 15 Mar 2022 22:13:07 GMT

@Peterparkyr wrote:
Thanks @myjourney !
This is the question that I was asking

http://ficoforums.myfico.com/t5/Business-Credit/Needing-some-help-on-new-LLC-and-getting-credit/m-p/3365637#M6823

It was just seeming really stupid to me that I had to apply for all of these net30 accounts and buy usless stuff that I dont need, when my credit is good enough to just open a credit card.

Net 30/vendor accounts won't help you get any bank issued business products or fund your business, but it will help you get more vendor credit if someones goal is to have a bunch of "NO PG" accounts and strive to get an "80 PAYDEX SCORE". But if you have good personal credit and want to get real business credit that will actually fund your business, it's no need to waste money on those net 30/vendor accounts.

Re: Are Net 30 accounts the only way to establish business credit?

myjourney — Mon, 14 Mar 2022 23:55:22 GMT

@Peterparkyr wrote:
Thanks @myjourney !
This is the question that I was asking

http://ficoforums.myfico.com/t5/Business-Credit/Needing-some-help-on-new-LLC-and-getting-credit/m-p/3365637#M6823

It was just seeming really stupid to me that I had to apply for all of these net30 accounts and buy usless stuff that I dont need, when my credit is good enough to just open a credit card.

The business landscape changed long long ago the answer to your question is: No net 30's are not required to succeed in building business credit. Example Cap1 and even Chase will give you a CC with no net 30's and in some cases even a newly opened business with no true income so to speak... afterall it's based on your personal credit so there is where your approvals start to build business credit

Re: Are Net 30 accounts the only way to establish business credit?

Citylights18 — Tue, 15 Mar 2022 00:01:13 GMT

Maybe I'm missing something with regard to the business credit development because I've had a business on file for only 6 months yet already over 75k in combined business credit line between 6 business cards, plus a business loan and if you throw that in that is 100k+ of biz financing.

But of course my personal credit score was a factor in my business apps and that might be what the OP is really trying to avoid here is the personal hard pulls.

Re: Are Net 30 accounts the only way to establish business credit?

pizzadude — Tue, 15 Mar 2022 00:52:48 GMT

@Citylights18 wrote:
Maybe I'm missing something with regard to the business credit development because I've had a business on file for only 6 months yet already over 75k in combined business credit line between 6 business cards, plus a business loan and if you throw that in that is 100k+ of biz financing.

But of course my personal credit score was a factor in my business apps and that might be what the OP is really trying to avoid here is the personal hard pulls.

That's my understanding as well. Their question was specific to obtaining biz credit without going the route of PG

Re: Are Net 30 accounts the only way to establish business credit?

Peterparkyr — Tue, 15 Mar 2022 03:16:45 GMT

@pizzadude, @Citylights18

Thanks for the replies!

To clarify, my original question was simply "Are Net 30 accounts the only way to establish business credit?" I don't mind PG pulls - in fact I would prefer starting out that way.

My question stemmed from the Business Credit 101 thread that essentially describes openning 5 net30 accts as a right-of-passage to business credit scores and Paydex scores.

Re: Are Net 30 accounts the only way to establish business credit?

SouthJamaica — Tue, 15 Mar 2022 13:50:03 GMT

@Peterparkyr wrote:
I have been building my business for a year, and plan to officially launch in 2-3 years. During this time period I would like to establish and build a positive business credit profile.

Simple question, I think: Are Net 30 accounts the only way to establish business credit? Are there other paths to establishing business credit?
Im in financial planning stages, and want to go down the right path - and at least know the options available.

No they're not the only way. You can just apply for a business credit card.

Re: Are Net 30 accounts the only way to establish business credit?

GApeachy — Tue, 15 Mar 2022 15:54:09 GMT

@Peterparkyr wrote:
My question stemmed from the Business Credit 101 thread that essentially describes openning 5 net30 accts as a right-of-passage to business credit scores and Paydex scores.

This thread implies that the only path to builidng business credit is to start with net 30 accounts.

For those that do not already have a Duns # / Paydex Score......the stickie suggests:

"The best bet for auto creation is to simply open some starter NET30 Internet based office suppliers (see below)." This is a suggestion to obtain the Duns number/score instead of paying D&B astronomical fees.

NO, you do not need Net 30's. Apply for what you need/want. If shot down and the reason is for lack of credit/lack of Duns number for your new Biz then perhaps consider a Net 30. Also, the Stickie does have other suggestions besides the Net 30 route that may help get you that number/score as well.

Good Luck on your biz venture!

Re: Are Net 30 accounts the only way to establish business credit?

FinStar — Tue, 15 Mar 2022 22:14:15 GMT

@myjourney wrote:
@Peterparkyr wrote:
Thanks @myjourney !
This is the question that I was asking

http://ficoforums.myfico.com/t5/Business-Credit/Needing-some-help-on-new-LLC-and-getting-credit/m-p/3365637#M6823

It was just seeming really stupid to me that I had to apply for all of these net30 accounts and buy usless stuff that I dont need, when my credit is good enough to just open a credit card.
The business landscape changed long long ago the answer to your question is: No net 30's are not required to succeed in building business credit. Example Cap1 and even Chase will give you a CC with no net 30's and in some cases even a newly opened business with no true income so to speak... afterall it's based on your personal credit so there is where your approvals start to build business credit

Long time no see @myjourney! Thanks for popping in! Hope all is well

Re: Are Net 30 accounts the only way to establish business credit?

Peterparkyr — Tue, 15 Mar 2022 22:15:12 GMT

Thanks @GApeachy

I'll comb through the post again. I've already got the DUNS number and EIN a while back when I opened my business account.

I think I'll just open a credit card to start building credit for a couple of years and climb up slowly.

Re: Are Net 30 accounts the only way to establish business credit?

GApeachy — Tue, 15 Mar 2022 22:20:59 GMT

@Peterparkyr wrote:
Thanks @GApeachy

I'll comb through the post again. I've already got the DUNS number and EIN a while back when I opened my business account.

I think I'll just open a credit card to start building credit for a couple of years and climb up slowly.

Solid plan. 👍

Re: Are Net 30 accounts the only way to establish business credit?

GApeachy — Tue, 15 Mar 2022 22:22:27 GMT

@FinStar wrote:
@myjourney wrote:
@Peterparkyr wrote:
Thanks @myjourney !
This is the question that I was asking

http://ficoforums.myfico.com/t5/Business-Credit/Needing-some-help-on-new-LLC-and-getting-credit/m-p/3365637#M6823

It was just seeming really stupid to me that I had to apply for all of these net30 accounts and buy usless stuff that I dont need, when my credit is good enough to just open a credit card.
The business landscape changed long long ago the answer to your question is: No net 30's are not required to succeed in building business credit. Example Cap1 and even Chase will give you a CC with no net 30's and in some cases even a newly opened business with no true income so to speak... afterall it's based on your personal credit so there is where your approvals start to build business credit
Long time no see @myjourney! Thanks for popping in! Hope all is well

Cool!!!

Re: Are Net 30 accounts the only way to establish business credit?

LP007 — Wed, 16 Mar 2022 19:39:32 GMT

@Citylights18 wrote:
Maybe I'm missing something with regard to the business credit development because I've had a business on file for only 6 months yet already over 75k in combined business credit line between 6 business cards, plus a business loan and if you throw that in that is 100k+ of biz financing.

But of course my personal credit score was a factor in my business apps and that might be what the OP is really trying to avoid here is the personal hard pulls.

That, sir, was the genesis motive. To have no PGs, build a two-year P&L sheet with $2MM-$5MM on it and never have to PG for anything in the future depending on your institutions.