I have a corporation since 1998. I have never borrowed any money for
the corporation. My view on borring money for business is very simple,
if I do not have money for something, I do not do it.
But, it so happens that from time to time, I need to establish an
account with a new vendor, they check my credit history and tell me
that I have no credit history.
I am loath to borrow money, but maybe I can borrow some small amount
for a few months just to establish some credit history? what is the
easiest way to acquire a credit history?
I buy several tens of K$ of electronic parts from the usual
distributors (Digi-Key, Mouser, Newark and Allied, mostly.)
I give them as trade references whenever applying for credit.
Only Avnet has ever turned me down, I guess I am too small
for them. So, for Avnet, I have to buy with a credit card.
For all others that I deal with a lot, I am on Net 30 terms.
I do not have a corporation, just a sole proprietorship.
HA, I haven't borrowed a nickel for 20 years. if you find out, let me
know. This is way less of an issue than it used to be, most places
just want your CC card number now. But, if you go to a new vendor with
a large order, expect resistance. I'm sure you have more trouble with
this because of our respective locations.
I bought a pickup and had cash, they almost wouldn't sell it, had to
take a loan out for 30 days. I changed banks a few years ago (dropped
Wells Fargo) and they almost didn't want me - no loan income.
What do you mean by saying "I bought a pickup and had cash, they
almost wouldn't sell it". A car dealer would not want your cash?????
Or was it a bank check?
I have not bought a vehicle from car dealers in quite a while, but
I bought my wife's car for a check a few years ago without problems.
On Thu, 04 Jul 2013 17:28:37 -0500, Ignoramus12069 wrote:
I had the same problem the last time I bought a car. I had the money in
my checking account, but they wanted me to get a loan -- through them, of
I finally had to look the guy in the eye and say, pleasantly, "if you
really don't want to sell to me today, I'll take my business somewhere
They took my check, and sold me the car.
When I found out I had the wrong checkbook with me - couldn't
change to a "finance deal" because the paperwork had already gone
through. Family friend, so no big deal.
"With Age comes Wisdom. Although more often, Age travels alone."
On Thu, 04 Jul 2013 15:40:15 -0500, Ignoramus12069
Ask for credit, get it, use it (ie. buy substantial quantities of
stuff and pay for it on time) and use that to get other accounts. It's
easy to get credit from vendors such as couriers to start with (and
you may need to back it up with a CC or something like that to start
with). If you want a bad credit history, just don't pay some stupid
The bank is only one source of credit information- potential creditors
are going to want to know whether you treat suppliers well too.
If you extend credit to customers, you've no doubt been asked to
provide credit references yourself so you know what they are looking
for (your credit limit extended, payment promptness etc.).
Typical credit application:
Then you can apply for a DUNS number and get D&B rated.
Note that credit ratings are not necessarily always used for things
you may entirely approve of. For example, before litigation the
plaintiff's law firm may run a credit check to see whether it will be
worth their while.
On Thu, 04 Jul 2013 15:40:15 -0500, Ignoramus12069
I was in the same boat when I wanted to buy my new truck. I hadn't
used a single credit card in ten or twelve years so I literally had
-no- current credit history.
I had to get a few credit cards from stores and credit card companies,
then build up some history of timely payments. I'd buy $100 items and
pay them off in 3 months, but no sooner. The credit rating companies
like to see steady payment streams.
My credit rating is 777 today, even on a _very_ modest income.
A sound mind in a sound body is a short but full description
of a happy state in this world.
It's going to be tough for a small business owner for a few reasons.
1) nobody wan't to take the first "move" if you have no credit history,
other than for something really token, like a phone company, a rubber
stamp and letterhead place and things like that. Even if they trust you
with $50, it's unlikely they will report this and nobody else will ever
know. See #3.
2) As the owner or officer, you will have to personally stand behind any
loans as well. This is easy enough for a credit card as there has to be
some name on it. In essence, it's your credit card of line of credit, that
happens to have a company name associated with it. If your company
defaults, you still have to pay.
3) Even if you do get a credit card, net 30 terms from some places, a line
of credit from the bank and you have real leases on things like equipment
it's possible (and more likely a fact) that none of these will be what's
called "reporting" - meaning if you're good and pay back that the lender
will write great things about you in your credit report, which for
businesses tends to be your D&B file. Your credit history with a corporate
card won't appear in your personal credit history either, it's as if it
never existed, good or bad, unless you default on it.
4) D&B sucks ass, and is a lousy place to deal with. They'll try to charge
you money to doctor your credit report, they beg for details of your
business and then I suspect, turn around and sell this data to junk
mailing lists. It does seem places like phone companies will somehow end
up in your paydex score, even if it's for totally silly amounts of money,
like $11/month for toll free numbers or something like that.
5) credit checks are pretty stupid anyways. I recall a pontential vendor
wanting to run a credit check on my company. Of course, they just exited
bankrupcy themselves, so it's not like I was the potential crook with
an accounting scandal and screwed over creditors, they were.
Your bank might be the best bet for any sort of line of credit or a loan
from your bank. If you can demonstrate you steady income, they may want to
You can easily get a credit card, but again, it's not going to establish a
credit history, and nobody else ouside that lender will know this ever
happened. They will lie to your face about it being a reporting card too,
trust me on this.
I may just borrow some token amount frmo the bank and pay it back. I
really do not need, nor use, credit, but some vendors require a credit
history, for example, if I want to rent a particular semi trailer for
look, it's simple. Put $10,000 on deposit in the bank in the name of
your business. Borrow $5,000 using the $10,000 as security. Pay it
back. you will get a very low interest rate and it's reportable. Or
buy something else for your business on credit, using cash in the bank
to securitize the loan.
No one has really answered your question, Iggy.
You need to establish a credit line with a business bank in your area
and tie it to your business bank account. It will cost you a bit each
year and you will have to supply a bunch of documentation. But once
done, you are good for probably two years.
Our credit line started at $50,000. A few years we upped it to $75k. the
bank wants more! It got us through the great recession.
Let you business checking balance run down to negative so your checks
draw on the credit line. Pay a few hundred on the credit line, but don't
pay it off right away. Do this for a few months. Deposit your checks to
a business account in a credit union savings account.
Do this for a few months and you can then pay off the credit line. You
will still have the backup, but you have now established a good credit
Cycle the credit line every six months or so to keep the bank happy.
Now you are running with the big dealers and can buy way more than you
have cash for.
On Thu, 04 Jul 2013 15:40:15 -0500, Ignoramus12069
Have you tried going to a bank, preferably one you already deal with,
and establishing a "Line of Credit", or a "Demand Payment Loan"? You
can then get a "Letter of Credit" from the bank which most businesses
will take as proof.
Do NOT do the stuff about letting a credit line start drawing owing to
overdrafts, etc., etc., etc., ... that will _NOT_ lead to positive
credit ratings, only overdraft fees and the like.
The one thing I would suggest that can help is to get a corporate credit
card from one of the majors and use it for routine expenses just as you
would a debit card except you're paying the bill when due at end of
month instead of it being drafted at the POS. No extra fees, no
interest, no actual out of pocket cost, but it does develop the credit
history by the record of payment.
I've used credit cards routinely both personal and business since uni
days simply to not need to carry any significant cash nor worry about
having the checkbook or, more recently, a check refused when not at
home. I've not paid a single interest payment other than once or twice
when out of town before telephone payment days and the check didn't get
there quite on time. A single payment of that type w/ an extended
period of on-time payment will have no negative impact on a score.
It's possible to get into trouble w/ CC's, sure, but if one is
disciplined in using them and doesn't use them just for whim purchases
just because can, they're no different than any other form of payment.
The problem isn't the CC; it's the person using it, Dave Ramsey
notwithstanding. And, since I rambled onto that already, there's
nothing wrong w/ using credit in business for cash flow or expansion or
whatever again as long as one has a solid business plan and the
discipline to follow through. This idea of never doing anything until
cash is at hand may work for low-capital-intensive operations but it
will not work very successfully in many other situations. If we didn't
have a substantial LOC we'd never get a crop planted or upgrade
machinery or many other things that are mandatory to operate the farm
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