- January 22, 2020
- Posted by: credit
- Category: Articles
There are 3 main business credit reporting agencies in the United States,Dun & Bradstreet, Experian and Equifax Commercial. These are the reporting agencies your EIN credit is reported to.
Dun & Bradstreet, often called D&B, is the biggest business credit reporting agency, about 10X larger than Experian or Equifax. They provide information on businesses and corporations for use in credit decisions worldwide and publicly traded company (DNB) on NYSE, headquarters in Short Hills New Jersey.
D&B roots track all the way back to 1841, with the formation of the Mercantile Agency in New York. This was 50 years before the first consumer agency Equifax was born. In 1933, the Mercantile Agency joined with R.G. Dun & Company and became known as Dun and Bradstreet.
Four US Presidents were former employees of Mercantile Agency, which later became D&B. They are Abraham Lincoln, Ulysses S. Grant, Grover Cleveland and William McKinle. All of them worked as credit reporters.
There are a couple of steps you’ll need to take to setup your business first, before you get setup with D&B.The very first step is to setup your business entity. You can build credit with any entity. But you’ll want to consider either a corporation or LLC to help reduce your liability in the business.
With Sole Proprietors and Partnerships, you ARE the business, you’re one and the same. In those cases, you’ll always be liable for what happens in your business. With Corporations and LLCs, you and the business are separate from each other, making it easier to also separate your liability.
You can setup your entity by visiting your Secretary of State website. Search for the name you want to ensure it’s not already taken then follow the steps to setup a new for-profit or non-profit business. Fees vary by state, but the setup process usually only takes 15 minutes or less to complete.
Next, visit the IRS website to get your Employer ID Number or EIN. Do NOT pay for your EIN… it’s totally free. There are companies who try to look official and help you get your EIN, but at the end of the process they charge you a fee. You don’t need to pay.
Business credit reporting agencies like D&B get data from many different places. These may include: utility companies, landlord, companies that help setup new businesses, insurance and benefit providers and many others. If the reporting agencies know you exist, you can have a low credit score even if you have no credit.
Check with D&B to see if they have a record setup for you now.It’s FREE and easy to do this!You can go directly to D&B’s website to check iUpdate for your businessto see if you’re setup with D&B, Experian, or Equifax… all for FREE.
If you pull up a record for your business with the reporting agencies, before you take another step you should consider pulling your actual reports. To do this, you’ll need to enroll for credit monitoring.In doing so, you’ll see if you have any credit reporting. You’ll also see if you have scores. And if you have negative items on your report, you can dispute those through iUpdate or through monitoring.
If your search with D&B doesn’t show you have your D-U-N-S number, you’ll want to get it setup. In 1963, the introduction of the Data Universal Numbering System or D-U-N-S helped bring business information into the computer age. Today D&B maintains a database of over 213 million companies globally.
The D-U-N-S number is a nine-digit number issued by Dun & Bradstreet and assigned to each business location in the D&B database, each having a unique, separate, and distinct operation for the purpose. Every business must first have a D-U-N-S number before Dun & Bradstreet will assign a Paydex business credit score.
The DUNS number is the preferred method worldwide of identifying businesses. Unlike national Employment Identification Number (EIN), a D-U-N-S number may be issued to any business worldwide.
It is used by many foreign governments including the US and Australia, European Commission, and even the United Nations. More than 50 global, industry, and trade associations recognize, recommend, or require DUNS.
When you actually start applying for credit you should consider using some type of business address or virtual address but setting up your entity and your D-U-N-S will require a physical address of some kind, you can’t use a virtual address. And even though you can obtain real business credit without supplying your SSN….most business bank accounts may require one to be opened.
You can search for your DUNS through the link at www.dandb.com/free-duns-number. During the DUNS setup process you’ll be asked for A LOT of information. If you select that you’re a government contractor, you’ll get your DUNS in about 1-2 weeks.If you don’t pay D&B anything and aren’t a contractor, it can take up to 30 days to get your DUNS.
The process to obtain your DUNS will require about 10-15 minutes. Once you’re done, D&B will email you. Reps will also start to call and email you to upsell you to the D&B Credit Builder program.
With Dun & Bradstreet there are 3 ways to start building your business credit. The first way is by using their Credit Builder program https://www.dandb.com/credit-builder/. This runs $159 monthly (April 2017), or they’ll also often offer you a one-time fee you can also pay.They will offer to setup your D-U-N-S for you if you purchase, without you needing to wait 30 days to get it by mail.
With Credit Builder you also get…Access to your D&B scores and ratings, can add positive payment experiences to your report, get alerts when others inquire into your business and see how your company compares to others in your industry.
With Credit Builder D&B allows you to add trade accounts you already have that aren’t currently reporting to your D&B reports. These accounts then show as trade lines helping you build your profile and score. This might be something to consider if you have a lot of accounts you pay now that can qualify and aren’t currently reporting.
Keep in mind, this service is only to add accounts to your D&B reports, not Equifax or Experian which many credit issuers and lenders use. Also, D&B isn’t helping you access new credit, only helping you add existing credit to your reports.
Also keep in mind, many types of accounts cannot be added to your D&B using this Credit Builder Service, https://www.dandb.com/glossary/trade-references/.From https://www.dandb.com/glossary/trade-references/, “D&B works together with thousands of nationwide vendors that report payment experiences on a regular basis. These data providers have requested to remain anonymous and cannot be added by a customer for trade reference.
Some types of companies do not respond to D&B’s requests for information within a reasonable time frame. D&B will make 6 attempts to contact a company that has been selected to provide trade reference, and will accept inbound references at any time. However, a customer may resubmit references at any time, after which D&B will make 6 more attempts.
Certain companies have proven, over time, to be less trustworthy. Accordingly, D&B has identified certain characteristics associated with companies and maintains policies related to the eligibility of that company to provide a reference.”
From https://www.dandb.com/glossary/trade-references/, “The following kinds of trade references are amongst those that are not accepted by D&B. Payments that have not yet been made but are anticipated, payments to businesses that have shared principals or some other type of legal ownership relationship, financial services: banks, credit unions, and insurance, bank references, utilities and gas companies, credit card companies, landlords, virtual offices credit counseling or registered agents, international companies, and businesses with an unknown SIC“.
So, before you buy, think about the accounts you may have who might report… Such as your CRM or other types of software or other accounts that aren’t restricted. Also keep in mind, getting D&B on the phone with your service provider isn’t always easy… and very well can take time.
If you DO have good personal credit now, or a personal guarantor, you can shortcut your business credit building process with all 3 reporting agencies. With UBF, you work with a funding source that specializes in securing business credit cards. This is a VERY rare, very little known about program that few lending sources offer.
They can usually get you 3-5 times the approvals that you can get on your own. Individual approvals usually range from $2,000-50,000. Approvals can go up to $150,000 per entity such as a corporation.
With UBF they actually get you 3-5 business credit cards that report only to the business credit reporting agencies. This is HUGE, something most banks and card issuers don’t offer or advertise. The lender can also get you low intro rates, typically 0% for 6-18 monthsand they’ll also get you the best cards for points, meaning you get the best rewards.
You must have excellent personal credit now, preferably 685 + scores… the same as with all business credit cards. You shouldn’t have ANY derogatory credit reported to get approved.You must also have open revolving credit on your consumer reports now. You’ll need to have 5 inquiries or less in the last 6 months reported and you can also use a guarantor.
All lenders in this space charge a 9-15% success based fee. You only pay the fee off of what you secure. Remember, you get a ton of extra benefits and about 3-5 times more money with this program than you’d get on your own… which is why there’s a fee… the same as all other lending programs.You can get approved using a guarantor. You can even use multiple guarantors to get even more money.
You can also build business credit using NEW accounts, instead of adding existing accounts to your D&B profile. There are many benefits of building business credit this way you don’t need to buy Credit Builder, you don’t need good credit, cash flow, or collateral, you’re building your business credit AND getting real useable credit at the same time and you’re building credit with all 3 reporting agencies.
Vendors are companies who will offer you credit, even if you have none now, and report to the business reporting agencies. They will offer you Net 30 terms usually… meaning you have 30 days to pay off what you borrow in full. Some will offer Net 10, 15, 20, 30, or 45 days and you can get approved even as a startup.
Before you apply for vendor accounts, you should setup your business credibly first.
Credit issuers and lenders have a “secret” set of requirements you must meet to get approved. These requirements are to determine if your business is legit and “credible”. You must insure you meet these requirements BEFORE applying for any type of credit.
You must have a website and professional email address… Not a Gmail or AOL type email. You must have a BUSINESS phone #… Not a mobile or home phone. You should have a toll-free # and fax #. Your phone needs to be listed with 411 and you should be listed online, and all of your listings the same.You need a real business address or virtual address… or a home address, not a P.O. box, or UPS address. Make sure you obtain all necessary licensing needed for your industry and state. You should be listed online, and all of your listings should be the same.
Some vendors to start with who report to D&B and will approve you with no existing credit include Seton, Quill, Gemplers, and Uline. For REAL business credit linked to your EIN not your SSN… don’t put your SSN on the application.
D&B will want you to have 2-3 of these types of accounts to activate your profile and score. You do NOT need to pay D&B to have your profile activated. You just need to find items you want to buy, apply for credit, use that credit, pay the bill timely.
You should have 5 payment experiences to start applying for store credit. Most major retail stores offer EIN only business credit including, Staples and Office Depot, Lowes and Home Depot, BP and Chevron, Best Buy, Apple, and Dell, Walmart, Costco, and Sam’s Club and most others.
With 10 total payment experiences you can start to secure fleet and cash credit cards based on your EIN only.And you’ll have a much better chance of getting loans and credit lines. In some cases you can even obtain lending such as auto leasing without a personal guarantee.
Just like with consumer credit, building your business credit is a never-ending process. The more credit you apply for the more you get… and the more you use that credit the higher your limits become. Also keep in mind, ALL lenders review business credit when applying for business loans… even high-risk lenders.
The main credit score used in the business world is known as a Paydex score, provided by Dun and Bradstreet. From D&B… “The D&B PAYDEX® Score is D&B’s unique dollar-weighted numerical indicator of how a firm paid its bills over the past year, based on trade experiences reported to D&B by various vendors.”
The Paydex score ranges from 0-100, with 100 being the best score a business can obtain. A score of 80 or higher is considered “good” or healthy credit. A business can obtain a good business Paydex credit score by ensuring payments are made promptly to suppliers and vendors.
Business credit scores are based only on whether the business pays its bills on time:
Expect payment may come early 100
Payments comes within early discount period 90
Payment is prompt 80
Payment comes 14 days beyond terms 70
Payment comes 21 days beyond terms 60
Payment comes 30 days beyond terms 50
Payment comes 60 days beyond terms 40
Payment comes 90 days beyond terms 30
Payment comes 120 days beyond terms 20