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Business Credit 101

Moderator Emeritus

Business Credit 101

I know this thread is a long time coming.. I finally took the time considering all of the interest in the forums about establishing and building business credit. As always, I am not a lawyer and YMMV.

Establish the Business

1. NAME YOUR COMPANY - The first step in this process is to select a company name. Be sure you pick one that has not been selected by another company in your state, You can check with you Secretary of State and once that is done you can move onto the next step.

2. INCORPORATE YOUR COMPANY - Now that you have selected your business name, you are going to need to establish your corporation with the state of your choosing. To do this, you can go to "Free Registered Agent". which is owned by InCorp Services. They will give you registered agent services free for the first year. They also only charge a nominal fee plus your states filing fees to incorporate your business.

3. OBTAIN AN EIN - Once you have incorporated your business you will need to obtain a Federal Employer Identification Number. You can file form SS-4 online at the Internal Revenue Service website.,,id=102767,00.html

Once you have completed this form you will obtain your EIN in a matter of seconds. Be sure to print it out and write it down because they do not send you an email confirmation. This is the number that you will need in order to apply for credit under your business name without a personal guarantee.

4. ESTABLISH A LOCATION - So now you have your EIN and are incorporated. Your business needs to have a physical location that is not your home address. The UPS store will not work because most creditors have them flagged. An alternative is to get a virtual office in your home town. Most of these will supply you with a lease agreement (sometimes needed to get credit), license hanging services, your name on a wall plaque at the location, and mail forwarding services. You should be able to find these services bundled for about $100 per month. In addition, some of these places will even allow you small usage of the buildings conference room and offices for an additional fee. This is great if you just need a completely quiet place to work for a few hours or if you need to sign a contract or conduct a meeting.

5. ESTABLISH PHONE SERVICE - Now that you have a physical location for your business, you will need to establish a utility bill using your newly received EIN and business address. There are many choices for this step of the process.

a) Contact your local telephone companies business sales department and request what they call a Remote Call Forwarding Number. This is a number that the phone company manages at their and is forwarded to a number of your choosing. They will usually charge a setup fee and $10 to $15 per month. Make sure you give them the address of the office that you set up and the EIN number. Also make sure that they will list you in the 411 directory under your address, not theirs.

b) Another method is to get an 800 number and have it forwarded to a number of your choosing. You can then utilize "List Yourself" to add yourself to your local 411. However, this is not recommended because there is still no free way (that I know of) to list yourself in the national 411 directories.

c) For those of you that need a true business line, you can subscribe to the Vonage Small
Business Premium service (or any other small business VOIP service) and for $49.99 per month and they will list your business in both your local and national 411 directories.

6. ESTABLISH A CHECKING ACCOUNT - Once you have all of that in order, you can now open your corporate checking account. Many banks only require $100 to open the account, 2 forms of identification, and your Articles of Incorporation.

7. OBTAIN A D-U-N-S NUMBER - Now you need to go to Dun & Bradstreet and obtain a D-U-N-S
Number. In the two more years of buidling business credit I have noted one ever constant factor.... Dun & Bradstreet is the leading cause of headaches for businesses trying to build a credit file. Smiley Happy New business owners are especially prone to the sales pitches thrown by commission hungry DUNS sales reps. Just about every new business owner tends to ask a question about DUNS or ends up complaining about them.

The front lines of D&B are covered by the DUNS sales representatives. More often than not if you are trying to get a DUNS number from them it starts the vicious cycle of how worthless simply having the number will be and how you "need" to buy CreditBuilder or another product to have a full rated file. The plain and simple fact is, you do NOT need to buy anything from DUNS to end up with a fully rated file! DUNS sales reps will of course try and tell you otherwise in hopes of making you pay.

Unlike personal credit CRAs, DUNS is not governed by the FCRA. They are a loose canon existing within a realm of pure gray area when it comes to regulation. Simply put, they can screw you and get away with it if your not careful.First thing that has often been misunderstood is that you need to get a DUNS number in order to have a file. Or that you need to contact DUNS to open a file or get a number. This is misinformation.

A DUNS number can and is automatically created by one of the following:

a) When your first NET30 account reports the tradeline the DUNS system will automatically create your number and file.

b) If you are incorporated, the Secretary of State in your state will often automatically report your corporation's existence as it reports quarterly or semi-annually to DUNS.

I am unsure if every states SOS office in fact does this. Many I know do. The best bet for auto creation is to simply open some starter NET30 Internet based office suppliers (see below). Be sure and use the account and then promptly pay the invoice you get. Most of these places will open you a NET30 terms account with as little as a 411 phone listing for your company. There are enough of these vendors out there to use if one or the other gives you grief insisting they need to see a credit file. Some of these vendors may ask you to place an initial prepaid order. No biggie. Get it out of the way and move on to having a NET30 terms account. Many will open you one from the start no questions asked.

If you need a DUNS number immediately it can often be obtained from the government contracts site:

Though it's just as easy to let it auto create. The thing you MUST be is PATIENT! It's not going to all happen in a day or even a week. If you miss out on the vendors reporting cycle it may take a number of weeks for the NET30 to report. But given your alternative of calling the main DUNS numbers and getting grief from the commission hungry reps and possibly getting your file flagged by a rep who is going to try to hamstring you or otherwise extort services from you, it would be wise to just let it auto create.

Again, you DO NOT need to call DUNS to get a number or file. Just like Experian business files, DUNS will auto create with the SOS or first tradeline data.

When you do a search on DUNS for your business and it finally shows up, then you want to get eupdate access. In order to access your eupdate report you need two things, your DUNS number and an eupdate password. The easiest way to accomplish this is to click your business when it shows up in a search. It will give you several different type reports you can buy on the company. Select the cheap $9.99 basic report. All you want is the DUNS number here. Buying more expensive reports will likely not yield any other info given how new your company is. Don't waste your money. Spend the $9.99. Buy the report. You will then get to see your DUNS number.

Ok, go to eupdate.... (keep in mind that the eupdate site is frequently down for whatever reason)

Bookmark this page. But do not do anything yet cause chances are if you fill out the sign up info at this point your just gonna get an error page saying your entered info doesn't match what's on file. The real problem actually is that your report doesn't have all the info on file for the eupdate system to match against.

Instead, call 1-866-834-4699. This is the entity department. Tell them your DUNS number and that you are having an issue getting your eupdate password. They will either verify company info with you right then and there or they will take your company and phone number and put you on the callback list for their department. If they tell you the rep will call you, they will and be sure to answer the phone when you see them calling (this department is not the sales department) they will run down the company info asking about biz stats and owners, etc. They will probably ask for financials to round out your report. All this really means is they want a copy of a balance sheet. If you don't do them typically, go on Google and find a balance sheet template and fill it out. They will give you a fax number to send it to.

After they take your info you need to let the new info register into their system. This may take a day or two. At this point if they haven't already emailed you an eupdate password, the info that will allow the system to send you one should now be on their system and you can go up to the aforementioned eupdate link and sign up. They should simply send you one within a day or two after taking all your info.

When you talk to the rep at the above number, or the one that calls you back, be sure to get their direct number and extension as to follow up should they put an error in your file like an incorrectly spelled name or phone number. When you get your eupdate password log in. Do not choose the edit profile option. Just choose the one that lets you see the report. Any time you hit the edit button, DUNS keeps a running count and if you go into edit mode too much they will flag your file. You can get updates done easier when dealing with this department anyway. Most things you enter into eupdate will get you a verification call from DUNS anyway, so just don't screw with the edit section.

Also don't look at your eupdate every day. Updates are typically only done once a week and visible on Sundays anyway. So look on Sunday.

Other helpful hints....

- Do NOT go on app sprees. Inquiries set off alarms with DUNS and gets your file sent to an early fraud department which often results in your file being frozen with all reporting data and ratings removed.

- There is NO reason to call the main DUNS numbers or even deal with the sales team. There is not even any good reason to go get your DUNS number as to simply letting it auto create. I know some folks need it for Government bidding, but plan it out a little ahead of time and get the number by auto creation and you will have taken a serious step at avoiding the front line sales people that is the main reason for most peoples complaints.

- There are departments within DUNS who are not on commission and will never try to sell you a thing.

You just need to go in the back door.

Establishing your Business Credit

1. ESTABLISH YOUR INITIAL ACCOUNTS - Once you have everything that is required to apply for credit you can go about establishing your initial accounts, Before you go applying everywhere think again. This is a slow process and your business credit might be flagged or even blocked if you apply to too many places at once, I recommend that you start out with 6 to 8 companies on NET30 terms. Below is a list of companies that offer NET30 Terms. Purchase a small initial order from each of these companies that approved you for NET30. Pay your invoice off well before its due date as that is how the D&B Paydex Score is calculated.

- Fedex\Kinkos
- Quill
- ULine
- Nebs
- Reliable
- Office Depot
- Gemplers
- Interstate Battery

2. WHAT IS A PAYDEX SCORE - A Paydex score is what D&B uses to tell potential creditors about your payment history and worthiness. It scales from a range from 0 to 100, with 100 being the best possible score. You are going to want to keep your Paydex score at or above 80. Paydex score are broken down as follows:

100 - Pays before invoice is generated
90 - Pays during discount period
80 - Pays when invoice is due
70 - Pays 15 days beyond terms
60 - Pays 22 days beyond terms
50 - Pays 30 days beyond terms
40 - Pays 60 days bevond terms
20 - Pays 90 days beyond terms
UN - Unavailable

3. WAIT FOR PAYDEX SCORE - In order to receive a Paydex score, you will need to have five tradelines reporting to D&B. Once you have five reporting you will be assigned your Paydex score. Now that you have this Paydex score you can move on to establishing revolving accounts, you can move on to Building Your Business Credit.

4. WHILE YOU WAIT -  While you are waiting for your Paydex score to come through, you should also be able to open a revolving charge account at Staples without having your Paydex score. Most people get approved for $750 right off the bat. You will need to fax them in a copy of your phone bill however or at the minimum have your company listed in the 411.

5. GETTING A CELL PHONE - If you need cellular service for your business you should use you
business name and EIN to obtain a cellular phone, Most carriers will approve you for service without any deposits.

Building Your Business Credit

1. ESTABLISH MORE TRADE LINES - Now that you have your Paydex score you are going to want to begin applying to companies for revolving credit accounts. Remember, you DO NOT want to go on application sprees. You should start by applying to just a couple of companies.

2. CONTINUE YOUR BUILDING - Always wait a few weeks in between applying for more trade lines, and only do one or two at a time. Again it is important to stress that you should NEVER go on application sprees. This affects your business credit just as bad as if you were to do it with your personal credit.

3. REVOLVING CREDIT COMPANIES - Here is a list of companies that offer credit on revolving terms. Please remember that if they ask you for a personal guarantee to tell them you do not want to give it. Most times the company will just process the application without it.

- Staples
- Frys
- Walmart
- Lowes
- Home Depot
- Citi PP
- Dell

4. GAS CARDS - Here is a list of gas cards that you can get without a personal guarantee as well. These will come in handy when you are on the road for business.

- Conoco 76
- Shell
- Exxon/Mobile
- Chevron
- Sunoco

Good luck!

- Tuscani
Message 1 of 196
195 REPLIES 195
Moderator Emeritus

Re: Business Credit 101

Message 2 of 196
Valued Member

Re: Business Credit 101

Thank you. You just saved me alot of research.
Message 3 of 196
Super Contributor

Re: Business Credit 101

Good Job in posting this.
Message 4 of 196
New Visitor

Re: Business Credit 101

Awesome thread!  Here is my situation and I can pretty much tell I am going to have to work my magic through people I know :-).
I am starting a property management business and already have one building started and another on the way.  I have been in the business for 12 years as an employee and am trying to establish accounts with the vendors I need for the project, this is ranging from 10-20 within 1 week! 
I have already submitted my social and tax returns to the bank to establish an account with online ACH and other services.   I now need to have a bunch of credit accounts setup for appliances, name it :-).  For me it isn't the money I need to pay, but rather the timing of the project, I can't wait to ship an item prior to payment.
Do I dare use my own social? I have a 780 right now, but it is starting to drop due to new accounts, I just had my name added to a 3 million dollar building ...I would think this would be a good thing...., but unfortunately I took a hit.
Message 5 of 196
Regular Contributor

Re: Business Credit 101

I recieved this letter from Dunns&bradstreet:
are they trying to sell me something, I do not need
I am your rep handling your application!
I received the information you put online on our website.
Please read over information and give me a call.  I will be handling your duns number request.

Please understand that the you have options.  There are two types of duns number the free resticted number and then the validated duns number, read below.

The free duns number is restricted.
This means your number is unvalidated and unverified.  This simply states you have requested a duns number to list your business name, address, phone and line of business; all else will state undertermined.  This states we did not verify any information to show you are a real legitimate business or that you are not fraudelent or high risk. This is not for business to business.

> If you plan on being a business to business company, where you will be
> working with other companies, bidding on government jobs $50,000 or higher/or high competition; applying credit with suppliers, line of credit with  banks, insurance on building, etc you need to go thru our validation process.  If a business is asking for a duns number, they will pull your file to base a decision on.


> D&B wants to ensure the legitimacy of your company just as you would want us
> to ensure the legitimacy of other companies that you might want to do
> business with.  In order to be eligible for a complete range of predictive
> scores & ratings, you will need to complete the validation process.  This
> will build a full profile of who you are as a business.  This validation
> occurs only during our DUNSRight cerfitication which results in a complete
> credit/business profile of your business.

> First & Foremost are you familiar with Dun & Bradstreet?
> Over 90% of both US Nat'l Banks & Global 1000 companies use D&B to make
> better credit decisions.  D&B manages over 100 million business profiles; we
> have one of the largest databases in the the world.  We are strictly
> business information services. 

> There are two options on verification/validation process called Credit
> Builder.  >

> Credit Builder:  The credit builder will allow us to investigate corporate
> commissions, business license to show you are a legitimate business; we
> check public records to separate your from high risk files and do an
> interview and build a profile of who you are as a business.  Once this is
> done Dun & Bradstreet backs you up as a company stating we validated your
> information.  This also generates two medium risk scores and a password.
> The password will allow you to go online to review your file and make
> changes as needed.  The two medium risk scores show you are not a high risk.

> If a business is asking for a DUNS number, they will pull this file to base
> a decision on to do business with you.

> The more information we have on you , the better.  Building your full
> profile is the foundation to starting to build business credit.  This will
> help you negotiate better terms with your suppliers; obtain better interest
> rates with your bank; and pay lower insurance premiums.

> Flyers attached above for the Credit Builder (one time fee of $299) and the
> CREDIT BUILDER PLUS (one time fee of $549).  The Credit Builder plus also
> allows you to add trade references to show paying records.  This gives you
> more clout more history, helps for instant credit with new vendors; better
> terms, discount rates, etc..Shows History.

> Good credit is the lifeline of your business.  It enables you to obtain
> funding for things like expansion, capital expenditures, research &
> development, and staffing.  It is the principal contributing factor to your
> business's future growth, not to mention the cash necessary to cover your
> cost of doing business; such liquidity lets you respond quickly to time
> sensitive requirements, without halting or compromising operations.

> It's not just about getting access to financing; business credit has
> increasingly become the primary vechicle for setting terms on business
> loans, determining insurance premiums, even setting lease payments.  Good
> business credit can earn you lower rates, strengthening your cash flow.

> Showing a profile of who you are as a business and making yourself locally
> and  U.S. wide/Internationally known.

> Have a great day!

Message 6 of 196
Regular Contributor

Re: Business Credit 101

To the question about if it is safe to give out your social security number. Yes. Generally business credit will not be listed on your personal credit report and you will not take a hit for utilization. You will take a small hit for the inquiries and they will stay. Some people try and challenge them later on the grounds that they were for business purposes and so should not be listed on your personal report. So use them judiciously where it will do you the most good. I would try to keep the inquiries down to two per month. Incidentally with very good personal credit you can get some business credit for home based businesses and with out a business land line or a separate office address. On the question of whether to pay Dun and Bradstreet for their credit builder package, I'm told it makes the process easier and possibly faster, but you can build your Duns rating and Paydex score without it.
Message 7 of 196
New Visitor

Re: Business Credit 101

Hi Rhino, I have a question for you, how can I challenge some of the inquiries on my personal as many of them were for business reason. Such as a checking account, business retail financing, I am a sole pp , how can i challenge as it is hurting my score. 
Message 8 of 196
Regular Contributor

Re: Business Credit 101

You challenge them with a statement like: This was an inquiry for business related credit and so should not be on my personal credit report. May work some times.
Message 9 of 196
Regular Contributor

Re: Business Credit 101

This thread is excellent and will be growing with valuable information. My question is this: has anyone used or heard of Smart Bussiness Reports by Experian? Also, will this be another good way to track bussiness credit other than DandB
Message 10 of 196
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