How does LLC credit work [Expert Advice]

Last updated : Sept 4, 2022

What is the best way to build business credit?

1. Step 1 – Choose the Right Business Structure.
2. Step 2 – Obtain a Federal Tax ID Number (EIN)
3. Step 3 – Open a Business Bank Account.
4. Step 4 – Establish Credit with Vendors/Suppliers Who Report.
5. Step 5 – Monitor Your Business Credit Reports.

Is my business credit different from personal credit?

What's the difference between business and personal credit? Your personal credit is connected to you by your Social Security Number. Your business credit history is linked to you by your Employer Identification Number (EIN) or Tax ID Number, which is how the government recognizes your business for tax purposes.

Why do you need business credit?

Having access to business credit is the lifeline for a business. It enables you to obtain the capital you need to expand, cover day to day expenses, purchase inventory, hire additional staff and allows you to conserve the cash on hand to cover your cost of doing business.

How long does it take to build a business credit?

Some experts suggest that it takes three years to build satisfactory credit for your business. However, some lenders may require only one year of a business's operating tenure.

How can I get business credit in 30 days?

1. Check Business Credit Agency Databases.
2. Open a Business Credit Card.
3. Work with Vendors.
4. Pay on Time (or Early)
5. Make Your Business Legally & Financially Independent.
6. Have Patience.

Does an EIN have a credit score?

If your business has a separate “Employer Identification Number” (EIN) or “Tax Identification Number” (TIN), then your business will have its own credit score associated with that number.

Can you get a house with business credit?

Yes, you can use business credit to purchase a property. It's particularly useful for investors who are looking for commercial loans and it offers less personal risk. Instead of checking your personal credit history, lenders will check your business credit history and the value of the property.

Can my LLC affect my personal credit?

Situations Affecting Personal Credit There are a few situations when a bankruptcy filed by a corporation, limited partnership, or LLC might affect your personal credit report. If an LLC has debts in its name, only the credit of the LLC is affected. The exception is if a member of the LLC guarantees the loan.

How do I build credit with an EIN?

Establish credit trade accounts with several companies that offer revolving credit lines. Use your EIN when filling out applications, charge what you need and then pay the amount in full and before the due date to establish good credit. Companies like Dell, Staples and Lowe's often work with new businesses.

What does your business credit score start at?

For personal credit scores, the ratings range from 300 to 850, with most lenders requiring a minimum score of at least 600 for a personal loan. Business credit scores range from zero to 100 and most small business lending companies require a minimum business credit score of 75.

What can good business credit get you?

• It'll Be Easier to Qualify for a Loan.
• You'll Receive Better Loan Terms.
• It Protects Your Personal Finances.
• You'll Receive Better Terms from Suppliers.
• Get Access to Cash for Growth and Expansion.

How long does it take to establish business credit to buy a car?

It can take up to two years to build up enough credit for your business to qualify for a car loan. To get the highest score, you should do the following: Pay your bills early. A history of timely payments will improve your business credit score.

How can I start a business with no money or credit?

1. Freelance writing.
2. Virtual assistant.
3. Social media marketing.
4. Handyman services.

Why do I need a DUNS and Bradstreet Number?

The greatest benefit of establishing a DUNS number for your small business is that anyone seeking to better understand your business' credit history and creditworthiness will likely look to Dun & Bradstreet to find this information. Businesses that contract with government agencies are required to have a DUNS number.

Do you need personal credit to get business credit?

No, you don't need good personal credit to get a business credit card, as business credit cards are available to applicants with credit scores ranging from bad to excellent. The best business credit cards typically do require a good personal credit score, however, which means you need a credit score of 700+ to qualify.

Do you need a DUNS number to build business credit?

You need a DUNS number because it is required for receiving your business credit report from Dun & Bradstreet and for applying for any grants or cooperatives from the federal government.

Can you build business credit without a DUNS number?

To get a business credit score from Dun & Bradstreet, one of the three major business credit bureaus, you first need a DUNS number. You can request a DUNS number for free on Dun & Bradstreet's website.

Can I buy a house with my EIN number?

Yes. You can use your EIN to obtain a loan, as long as it is for business funding. You cannot use this number to take out a personal loan, as an EIN is only designed for business-oriented transactions.

Can I use my EIN to get a loan?

Can I Get a Loan with Just My Business EIN? Yes, there are certain circumstances where a lender will not use your personal credit score, but only your EIN as a factor in lending to you. Note that they won't just use your EIN in isolation, as there are many factors that go into qualifying for a small business loan.

Can I use my EIN number to apply for credit?

A SSN or another tax identifier is required to apply for an EIN, but once assigned, EINs can often be used on credit or loan applications in lieu of SSNs.

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it comes to building business credit and when it comes to obtaining business funding there's a lot of information out there that i don't necessarily want to say that it's incorrect but i think that maybe the way that it's put together in the pieces could be out of order so in this video i am going to be breaking down three different things that you need to look at apart from just having your llc here's why an llc is the legal formation of the business and again you can even use this for an s corp you can use it for a c corp uh brought forth but for the purpose of the video we are going to be using an llc because this is one of the more common ones that i see and you've probably seen it too think of a time where you were watching a video either on youtube tick tock instagram facebook wherever it was and someone posted that all you need to do is get yourself an llc and you can obtain business funding while there is some truth to that there are some steps that you want to take and there are some really some metrics that you want to pay attention to and so the first one that i really want you to again take a look at is even though the business formation or the business entity is set up through the llc how you set up your business is also going to be as important of you just opening up again llc through your state or through some third-party servicer that you're using like a legal zoom or even a zen business right this is an important piece to this entire puzzle especially if you are in a certain industry that's possibly more restricted than other industries we've made other videos talking about restricted industries we've made other videos kind of sidestepping how you can approach these banks and these lenders so that even though you're still doing the same line of work you're not necessarily shooting yourself in the foot when you are applying for business funding and you're going after business credit and you're building up your business credit profiles so the way that you structure your business is going to be an important piece to this because the way that you structure your business is how the lenders and it's how the banks or even the credit unions are going to judge your file because what a lot of people end up confusing and this goes for both new business owners and existing business owners is they think that just because they had a buddy or they had a let's say uh a colleague that they were able to get forty five fifty thousand dollars worth of a line of credit the automatic they automatically assume that let me do the same thing that they did and that's going to yield me the same results which is the second thing that we want to take a look at who are you forming a relationship with i can tell you that there's certain credit unions that are going to favor businesses that are maybe in the logistics space more heavily than maybe there may be someone that's more in the financial space let's say if you are a stock trader or you teach stocks or let's say that you have a credit repair business or um let's even take it a step further let's say that you have a logistics company but you also have another business and the other business that you have is maybe an e-com store we know for a fact that when it comes to e-com you'll go from three possibly 400 lenders down to potentially five or six lenders because that line of work is much more what we can call cash intensive versus maybe a consulting type of business so the bank the lender that you decide to let's say form a relationship with is going to play again another key piece into how much funding you can get but i want to take that a step further because often times and again it goes back to kind of like the information that we get which is why i really want to debunk this in this video it's not just about opening up a checking account at a bank you want to take that a step further if you really want to maximize the amount of funding that you get you want to get to know who the bankers are you want to get to know who's in charge of the small business division maybe in that area this is why just applying for big banks like your chases your wells fargo your bank of america yes you can pull some funding from them but you also want to pay attention to your regional banks and to your credit unions which is why we talk about them so much here on this channel who is let's say the the branch manager who is the small business division manager who's in charge of lending for let's say small businesses who's in charge of the lending or who does the underwriting for maybe the line of work that you do you want to find these things out because all of these are data points that you're not just going to get if you were to just search online which is why i always recommend take a weekend do your homework visit two or three credit unions get to know the brand see what they have to offer and see if that's someone that you want to even open up a business checking with and then the final piece of this is let's say once you've decided to open up your business checking once you've decided to establish your llc once you've shown them your ein your articles of organization your bylaws you've pretty much done the whole shebang right before you apply for funding you want to pay attention to your bank rating now they won't necessarily give you this but i'll give you the inside scoop on this a bank rating is formed whenever you deposit uh funds into that account and so the way that it works it goes from a three all the way to a 10 but for the purpose of the video you just need to focus between a three to a five you want to get out of the three zone as fast as possible if you are in the three zone this means that you have less than a thousand dollars sitting in that checking account so what you want to do if you really want to season that account you want to let this money sit in there for at least 90 i say 61 to 90 days right you want to let it sit there for 61 to 90 days inside of that business checking account nothing less than 5 000 but if you're a bit tired of money you can get away with 2 500 it's only going to put you in the low 4 range if you want to start creeping into that low to mid 5 range you want to be well over 10 000 in your checking account and then don't forget you want to have that money moving which is something that a lot of people and business owners forget to do and i think that this happens because we start thinking okay let me start applying for every single credit card that i can get let me start going after every credit union that i see rather than thinking strategically about this and thinking to yourself which credit union do i have the best odds with in order for me to maximize the funding and so rather than going after 50 credit unions let's maybe open up relationships with three or four that way we can use our resources to our advantage and we can become more resourceful with what we have if you found value in this video and if this is something that you want to learn more about this is something that we teach inside of the inside inner circle where we coach business owners and entre

Thanks for your comment Luisa Gould, have a nice day.
- Booker Sletten, Staff Member

i'd say one of the biggest if not the biggest issue that entrepreneurs run into is not whether or not they have a good idea it's not if they have a good support system in fact it's not even if there's a market for what they're selling or the services that or the services that they're providing the biggest issue that i've seen entrepreneurs run into is having enough capital to start a business keep a business going let alone keep it afloat and get a business to that next level that next income bracket into again into a scale type of format i bring that up because i'm tired of seeing entrepreneurs fall flat on their faces because they don't have enough income even though they have the right ideas and they have the right intentions so in this video i'm going to break down a key way that you can obtain business funding by using your personal credit and get it at a zero percent interest that's right you're going to get zero percent interest on the funding that you get for anywhere between 12 to 18 months depending on how you structure it now i want you to think to yourself what would twenty thousand dollars in funding do what would fifty thousand dollars in funding do what would a hundred thousand dollars in funding do would that's and be honest with yourself would that change your situation and the way that you're currently running your business now i can't answer that for you only you can now this question right here comes up quite a bit and it's kind of like an interchangeable way of asking the same question so i'll give it to you and you'll see what i mean the first one is irv how long does my llc need to be open before i can get business funding and then the other question is can i get business funding if i just opened up my llc which is again kind of like asking the same question but in a different way and the answer to that is you can get business funding with a brand new llc like yesterday i'll give you an example i had a good friend of mine that had just opened up an llc in the beginning of october october 2nd to be exact he opened up that llc october 2nd october 3rd he was able to get up to 65 000 in funding which is how i'm going to i'm going to show you how exactly he did it in this video now if you're thinking okay he must have had another business that he was running the answer to that is no uh he must have came in with a lot of capital to show the bank the answer to that is no because this goes off of stated income stated income is totally different from having to use your tax returns i'm going to give you the first thing that you need here because if you don't have this then the rest of the video becomes irrelevant and i don't want to drag you along because this is going to allow you to work on this first and then come back to this video so if you don't have it save the video and then come back to it or if you want to finish watching it so that you at least know what you need go ahead and do so and the first thing is you need to have at least a 680 personal credit score now i have seen banks especially if you know it gets tighter the tighter the way that it possibly did last year when banks started kind of under a bit more strict then you could see that creep into the 7 7 10 but overall a good rule of thumb is 680 just to get the conversation going is what your personal credit score needs to be now i know you're probably gonna ask and the answer to that is going to be yes these uh this is going to be a personally guaranteed type of uh type of funding now one thing that i'm going to say before i give you the next step and the next pretty much piece of information that you should know is that never shy away from personally guaranteeing something just because you hear everyone say well you know you can get business lines or credit without personally guaranteeing it or you can get credit with only using your ein or your social yes i teach that you've been on my channel i have a full-blown master class on that i teach that to some of my students but one thing that i always say is that you never want to shy away from getting funding if it means your business going out of business right so rather than me having to wait six possibly seven or eight months in order for me to get uh business funding through my ein without having to use my social security number because that is a process to build up you still want to use and your personal credit to personally guarantee something especially if you're someone like me and you are someone that's going into business with the mindset of this is all or nothing this is going to work i have my strategy in place i don't mind personally guaranteeing something because i know what it takes for me to get this business off of the ground and i know not to over leverage myself so even if i get access to 30 000 worth of funding right now i may only need three thousand dollars for these specific products or maybe to hire out some type of help or get some type of service going right so you do want to kind of keep that in mind as you're applying for some of this funding i say that because no one wants to go into business thinking oh my gosh what if i get all this funding if i fail right you want to know how much of a risk tolerance you have that's just a little side note that i want to give you second thing that you need to know is that this is going to go off of stated income meaning you do not need to have or you don't need to show uh proof of tax returns this is why my friend that was able to obtain uh funding with an llc that was about two years or two years old about two days old he doesn't have any tax returns to show because it's a brand new startup so he had the 680 plus credit score he did he only went off of stated income which means he was able to show proof of how much he makes at his job right now or off of another business or if you wanted to take it even a step further depending on the type of credit line that you're applying for if you go off of stated income you can even go off of what you put what you project to make which is going to be more of a projected revenue type of product if you have twenty thousand fifty thousand maybe even sixty thousand dollars worth of funding kind of like what we mentioned earlier of how that would impact your business would it really matter if you personally guaranteed it going forward of the impact that that would have in your business and the potential income that you would be leaving on the table if you said no the amount that you qualify for is anywhere between twenty thousand to two hundred thousand dollars you heard that correctly twenty thousand to two hundred thousand dollars and it is going to be a revolving line of credit which means that it's going to be multiple lines of credit reporting onto your file now one thing that's cool about this is that if you have an llc then you know that the llc what you get approved for doesn't reflect on your personal credit so you can let's say if you have a hundred thousand dollars worth of funding and you run up eighty thousand dollars since those lines of credit were opened up through your llc that utilizati

Thanks Kete0 your participation is very much appreciated
- Booker Sletten

About the author

Booker Sletten

I've studied physical metallurgy at North Dakota State University in Fargo and I am an expert in astrometry. I usually feel moody. My previous job was mechanical engineering technician I held this position for 17 years, I love talking about dance and astrology. Huge fan of Ryan Kwanten I practice disability sport and collect sports cards.