On this episode of Rhodes to Success, I interview Ty Crandall, who is an internationally known speaker, author, and business credit expert. Ty is the CEO of Credit Suite, where he created, and continues to grow, one of the biggest and most credible business coaching operations in the United States. Ty brings to the table more than 16 years of financial experience and is an authority in business credit building, business credit scoring, and business credit repair. During this episode, Jessica and Ty discuss business credit, business applications, how Walmart uses credit, why you shouldn’t disclose your social security number, and how to build a business credit profile and score.
Main Questions Asked:
- What excites you about credit?
- What do you say to entrepreneurs who don’t want to use a credit card?
- If your business doesn’t have a big history, will they check your personal credit score?
- What are the steps to build a business credit profile and score?
- What mistakes do entrepreneurs make when taking out business credit?
- How do you help people get over the mindset of not wanting debt?
Key Lessons Learned:
- We are conditioned to think that debt is bad. Ty agrees with this on the personal side, but not on the business side.
- Don’t use your own personal credit to build your businesses.
- Anyone, even as a startup, can obtain business credit and can start to get money immediately without the personal liability, and use it to build and fund the business.
- You don’t need to provide your personal social security number to get a business credit check and obtain business credit. What you need is a foundation.
- When you put your EIN on an application and leave the social security number blank, you are forcing them to pull your business credit. This means you will be approved on business credit if that is established.
- You need a foundation from vendor accounts who will give you credit, even if you have none.
- These vendors report to the credit agencies so you can get real credit you can use.
- Pay your bills on time, then they report the credit, so you now have an established business credit profile and score.
- This can be used as a springboard to get store and cash credit.
- The most successful companies that exist are good at using other people’s money. For example, Walmart.
- 80% of what Walmart has stocked is bought using credit. When customers buy, Walmart uses that to pay off the credit.
- Almost 30% of your FICO score is utilization.
- If you start to use a personal credit card to fund a business, and utilize it too much, your credit score will start tanking.
Building a Business Credit Profile and Score
- Business credit is the same as consumer credit.
- You start with no credit profile, and get some accounts that report.
- Keep in mind you are not starting with secured or lower-limit credit cards like you would in the consumer world.
- Business credit fundamentally starts with vendor accounts.
- With vendor and Net 30 accounts, you have 30 days to pay back that balance.
- Business credit scores are only based on how you pay. If you pay early or on time, you are immediately awarded with a good score.
- Most major retailers will offer you business credit once you have your profile and tradelines established.
- People apply without having a credible business. To avoid this, make sure what is on the application reflects that you are a credible business.
- Don’t skip the vendor step. Make sure you get at least 5 vendor accounts, then move into store credit, then to cash credit.
Providing the Social Security Number
- The biggest mistake is people putting their social security number on the application.
- When you provide the social security number, and you default, they come after you personally.
Using Credit and Financing
- You are either going to fund the business from the profits, or you can get a cash or credit injection and do it at a faster pace and higher level.
Business Credit Scoring Model
- Paydex runs 0-100 points.
- For the main scores, it is only based on how you pay. This is why you can build business credit fast as opposed to consumer credit.
The music in today’s episode was written by The Danger Os and produced by Nick Palmer. Check them out at https://www.facebook.com/thedangerosmakemusic
Links to Resources Mentioned
Perfect Credit (book)
Business Credit Decoded (book)
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