JF2022: Business Credit Tips With Stephen Wible
Stephen is a former Marine Corps Veteran and has owned 300+ Rental Units. He is a business credit expert, in fact, he wrote a book called “The business credit; the complete step by step guide.” He gives some great advice on how to build and maintain credit for your business and shares the three most common mistakes people make when it comes to getting approved for a loan. You will also learn what you can do if you already have a bad business credit score.
Stephen Wible Real Estate Background:
- Marine Corps veteran, sold, invested, and managed real estate, owned 300+ rental units
- Business credit expert specializes in helping obtain and manage credit for their business
- Based in Tampa, FL
- Say hi to him at https://businesscreditspeaker.com/
Best Ever Tweet:
“We call that the “secret sauce,” if you know who reports and who will approve you, then you can very simply just follow a step by step process I laid out in my book ” – Stephen Wible
Joe Fairless: Best Ever listeners, how are you doing? Welcome to the best real estate investing advice ever show. I’m Joe Fairless, and this is the world’s longest-running daily real estate investing podcast, where we only talk about the best advice ever, we don’t get into any of that fluffy stuff. With us today, Steve Wible. How are you doing, Steve?
Steve Wible: I’m great! How are you, Joe?
Joe Fairless: I’m great, and looking forward to our conversation. A little bit about Steve – he’s a former marine. Thank you for everything you do for our country, first and foremost. He has sold, invested and managed real estate. He has owned 300+ rental units, he is a business credit expert… In fact, he wrote a book called “Business Credit: the Complete Step-by-step Guide”, and he specializes in helping obtain and manage credit for your business. Based in Tampa, Florida. With that being said, Steve, do you wanna give the best ever listeners a little bit more about your background and your current focus?
Steve Wible: Absolutely. Right now I’m working for a company called Credit Suite. I’m the head of their business development. And the reason I was attracted to this company is I was around for the ’08 crash, as I’m sure most of your listeners were, and when it all went down, I was able to walk away with almost perfect credit. Now, the question is how did I do that, right?
Joe Fairless: Huh… What did you have going into it in terms of portfolio
Steve Wible: I had at one point 300 single-family units, and I also had a 35-unit apartment complex, and a 187-unit apartment complex.
Joe Fairless: So in 2007 what did you have?
Steve Wible: In 2007 I had 234 left.
Joe Fairless: Cool. Alright, good stuff.
Steve Wible: So when it all crashed, [unintelligible [00:02:24].00] single-family homes and whatnot; that has some effect. However, none of my business debt affected me at all, and I’m talking high-limit credit with Home Depot, with Lowe’s, Visas, Mastercards, five different vehicles in the company name… None of it was against my credit.
Joe Fairless: Just so I’m clear – so you lost those properties, they were given back to the bank, and it didn’t affect your business credit. Am I hearing you correctly?
Steve Wible: It didn’t affect my personal credit.
Joe Fairless: It didn’t affect your personal credit, but you were foreclosed on with those properties.
Steve Wible: Kind of. I actually made a deal because I felt bad for the tenants. I saw what was going on… I didn’t do what a lot of people did, which was just collect the rent and not pay the mortgage. What happened is the Section 8, which was the majority of my tenants, they have what’s called Fair Market Rent, FMR. And as the market crashed, so did my rents. So I went from collecting anywhere between $800 and $1,000 per unit, down to as low as $250 and $300/unit.
Joe Fairless: Okay…
Steve Wible: So I went from making X amount of dollars per month to losing close to $100,000 a month.
Joe Fairless: Okay.
Steve Wible: So I went to the banks and said “Look, what I don’t wanna do is just collect the rent, not pay you, take you a year to foreclose… These are families; I don’t want a sheriff showing up at their door. I’ll make a deal with you.” It was ten different banks. “I’ll deed them back to you, in lieu of foreclosure, if you honor the leases for the next two years. And you can collect the rent; I’ll sign the rents.” And it worked.
I was one of the few I knew that did that. A lot of my friends walked away with a lot of cash, I walked away with my hat in my hand. But all the business debt I had created, in other words the operational debt – everything from the computers in the entire office, all the vehicles, all my credit with Home Depot and Lowe’s, the Visas, Mastercards, American Express… All of it. None of it was tied to me personally. So I literally walked away clean.
Joe Fairless: So you said your personal credit didn’t get affected, but then you also said your lines of credit with your businesses were not affected either.
Steve Wible: No, no, no.
Joe Fairless: Help me understand this.
Steve Wible: Okay. Accidentally, I figured out how to build my business credit profile. It took me a long time. When I started getting approved for credit in the company – in other words, tied to my EIN, not to my social.
Joe Fairless: Got it.
Steve Wible: When I shut the company down – because obviously the company was bankrupt, there was no more assets; and I didn’t file bankruptcy – the debt was just wiped out. It was not tied to me, nobody came after me personally… I was also one of the top five RE/MAX agents in the States… So when I moved to Florida — because everybody knew me, at this point nobody wanted to let me sell their house… [laughter] So I moved to Florida, I got my real estate license, doing really well, and then I found this company Credit Suite, who was teaching what I had learned through years of business. They were teaching people to do it in 5-6 months. And I said “I have to come work for you.”
Naturally, I called them, I asked for a job… First job ever. 53 years old. I’d never applied for a job other than the marines… And they turned me down. [laughs] Anyhow, they eventually called me back and I ended up working for them… And I didn’t even know how little I knew until I got here. In other words, I was good at it, but I had no idea. So anyways, that sort of attracted me to this company.
Joe Fairless: What were you doing, without prior knowledge of what you now know with Credit Suite – what were you doing that was effective for building the credit in your LLC name?
Steve Wible: That’s a brilliant question. So what I did is I took a shot in the dark — you could imagine how much I was spending with Home Depot, right? I took a shot in the dark and said “I’d like a Home Depot credit card, but I don’t wanna sign for it. I’m spending 50k to 100k every month with you”, and I got approved.
Well, once I had that approval, I didn’t realize it was reporting on my business credit profile. Then it was easy to get Lowe’s, then all of a sudden Ford was approving me, I was getting Visas, Mastercards, AmEX… All of a sudden, my profile was building organically.
Joe Fairless: Did you say Ford, the car company?
Steve Wible: Yes.
Joe Fairless: Okay.
Steve Wible: There’s actually a couple – Ford and Ally. Both will give you credit in the company name, not tied to you personally.
Joe Fairless: Okay.
Steve Wible: So I looked at that as “This is beautiful.” So when I got to Florida, it was the first thing I started to do. I started a business and started to build my business credit again. And look, it’s not really about if things go bad; obviously, you wanna protect yourself. But it’s more about protecting your personal credit for when those opportunities show up.
As we all know, personal credit is based on a series of things. One, how you pay your bills, two, how much debt you have, three, and most importantly in my mind, your utilization. Well, business credit doesn’t operate that way. So you can run up your credit cards and your debt max; it doesn’t affect your business credit score, and it absolutely doesn’t touch your credit score, because you didn’t apply, you didn’t sign. So I was able to keep my credit score in the 700’s while still generating debt. So then if a great deal came up – let’s say I found an apartment complex today that just fit my needs, my credit score hasn’t been touched, so I have no problem buying it.
Joe Fairless: Got it. So that’s what you were doing before… And then you jumped on board with Credit Suite. Now what are some enhancements to that process?
Steve Wible: Well, I only knew about the things that I knew about. I didn’t realize there were hundreds of people who would give me credit in the business name. And there is a step-by-step process. When you first start your company – and I’m talking like today; if you register your company today, within 30 days I’ll have you some sort of business credit. I didn’t know there were starter vendors out there, I didn’t know about Sprint, I didn’t know they offered business credit, I didn’t know about Apple, Dell… I didn’t know about all of these people.
There’s so many people who will give you business credit, but it has to be done in a very specific order. In other words, there’s starter vendors, you need an X amount of trade lines reporting, and then you can go on and on from there. But more importantly, you can’t get approved for even your first one unless your business is set up credibly. Now, that immediately brings questions to people’s minds, “What do you mean credibly? You mean I’m not credible?” No. But the biggest defense that banks and lenders and creditors have is to protect against fraud. They wanna protect against fraud. So they have certain steps that they follow – and it’s all done through artificial intelligence – to make sure that your company is legit, and it’s not a fraudulent application.
If you don’t mind, I’ll give you a couple of those things, because I’ll bet you 90% of your audience is gonna fail these 2-3 things I mention.
Joe Fairless: Alright, what have you got?
Steve Wible: Alright, first thing is – if you’re old enough to remember back in the day I used to pick up the phone and dial 411 and get Joe’s pizza up the street… That database still exists today, and it’s actually the first database that the banks check. The National [unintelligible [00:08:44].15] Business database. Unfortunately, if I ask most business owners for their phone number, they’re gonna give me their cell phone. Well, that you can’t list with National [unintelligible [00:08:51].25] database. It has to be a legitimate phone number.
Now, I know not everybody has a phone on their desk or a phone on their wall, but you can get what’s called a virtual phone number. And most of your audience I’m sure is gonna be familiar with Google. Google has their Google phone number. That’s the right path, but you’re on the wrong alley. They own that number, where if you buy it or rent it from a company like RingCentral; that’s your number, because you’re paying for it, and that’s listable with the National [unintelligible [00:09:19].06] database. That’s the first thing, and I see that all the time. I actually had a guy get approved for half a million line of credit when he was denied pretty [unintelligible [00:09:24].02] and the only problem was his phone number.
The second thing I see is the address… And it’s not that using your home is a problem, because it’s not. You can use your home, you can use an actual business address, or you can use what’s called a virtual address. And there is a big difference between a virtual address and a PO box, and that is the number one reason people fail – they’ll put down a PO box.
Joe Fairless: Okay.
Steve Wible: So a virtual address is actually a very specific industry. They won a lawsuit in the ’70s to be recognized as an actual office. So you can go to places like Regus — I think every city in this country has a Regus. You can run a virtual office from them. What you can’t do is like your buddy owns a grocery store and you have a backroom office in his store. That doesn’t work. So that’s the second thing.
The third thing – and this blows my mind – is the website and email address. I see people who have great websites and then their email will be Iminbusiness@gmail.com. [laughter] Or even worse, Iliketoguff@gmail.com. It’s unbelievable.
Joe Fairless: Right. Needloanasap@gmail.com.
Steve Wible: Exactly. So what we recommend — and look, Gmail has the G Suite, which is great, so you can personalize it. Like ours, email@example.com. Or firstname.lastname@example.org, or email@example.com. Whatever it is, it needs to be a legitimate business email address. Now, those three items, 97% of business owners I talk to fail one of them. And if you only get one wrong, you’re denied. Only one. Now, there’s a series of ten.
One of the things lenders look for is they look for congruency. In other words, across the entire internet they wanna see that your business address matches everywhere. Your phone number matches everywhere. That you have a fax machine, believe it or not, in today’s day and age. They’re looking for that. An 800 number is added value.
Joe Fairless: You have to have a fax machine?
Steve Wible: I know, it’s hard to believe. Nobody uses them, except digitally… But guess who does use them? Banks. Banks and lenders use fax machines. And I’ll put it this way – if Walmart wanted to buy your product and they sent in a credit app, and on the credit app they had the purchasing agent’s cell phone, no fax number, and it had firstname.lastname@example.org, would you think that was legitimate?
Joe Fairless: [laughs] Well, the email I wouldn’t think was legit, but no fax number – I’d be like, “Alright, welcome to 2020”, right.
Steve Wible: I agree with you, because I don’t have a fax. But you can get a virtual fax. When you get a phone number, you can add on the fax for free. And I’m sure you’ve them where you call up and “This is the fax. Press 1, or 2”. It’s the same thing.
Joe Fairless: Okay, got it.
Steve Wible: So there are the minor things, and there’s other items that go along with it as far as making sure everything matches. Like I said, that you have a real business bank account. I’m amazed at how many people don’t have business bank accounts. They run everything through their personal account.
So all these little items add up to a big mess if you don’t have them in order. And we have tons of videos out there. If you go to YouTube and check out our videos, we literally teach everybody the first steps… Because we want all the people to succeed.
And then once you have that set up properly, then getting credit is easy. You just need to know who to go to. Because the big issue is not everybody reports that gives you credit. For example, I had a printing company; we did about 25 million dollars. So you can imagine, because the margins aren’t big in print manufacturing, how much paper I must have been buying. How much ink I was buying, how many plates, and film etc. Well, almost none of them reported, so I wasn’t doing anything for my business credit profile. I had tons of credit, but nothing was reporting on the business.
So you need to know who to go to, and that’s the hard part, that’s the moving target. We call that the secret sauce. If you know who reports and who will approve you, then you can very simply just follow a step by step process and build it up… And I lay that out in my book, and certainly we lay it out in our program.
Joe Fairless: You mentioned a half a million line of credit earlier… Can a real estate investor get a line of credit from somewhere through this process, that allows them to go buy a property for cash?
Steve Wible: Yes and no. It’s gonna depend on their business. We look for the three C’s – cash, credit and collateral. Obviously, collateral – hard money and they could easily do it. My friend and I had a line of credit of two million with a hard money company.
Joe Fairless: At what rate?
Steve Wible: Back then? 12,5%…
Joe Fairless: What year was this?
Steve Wible: It was the ’90s through mid-2000.
Joe Fairless: Okay.
Steve Wible: It was as high as 18%, and as low as 10%. And I made money. Can you imagine?
Joe Fairless: Right… What about now?
Steve Wible: I’ve seen them — and I’m not a financial office; we have them and we definitely do hard money here… But I’ve seen them as low as 6%-8%.
Joe Fairless: Okay.
Steve Wible: That’s just not my department. So I hate to say 7% and have 1,000 of your listeners call up and be like “He lied.”
Joe Fairless: Yeah… [laughs]
Steve Wible: And obviously, rates just dropped tremendously a couple days ago… So it’s a moving target.
Joe Fairless: So from a business standpoint for a real estate investor – you’ve got a hard money department, but in terms of building your business line of credit it can be beneficial for especially people who are managing their own properties, because that’s where you’re gonna be having a large outlay of cash, like fix and flippers, and then you’ll be able to use credit with Home Depot or wherever else…
Steve Wible: Exactly.
Joe Fairless: …and won’t be out of pocket.
Steve Wible: Exactly. And here’s what’s great about it — and I know things have changed a little bit with the hard money world, but back when I started, they would fund the purchase and they would escrow the construction. I’m assuming that still happens today… But what I would do is I would get them to fund the purchase, they’d escrow the repairs… I would do all the repairs via my Visas, Mastercards, American Express, and my Home Depot and/or Lowe’s credit card, depending on what I was buying… Then they would release the escrow, I would keep that cash and pay off the credit cards once they have sold. In other words, I was taking my profits out early. That’s how I was able to leverage; instead of buying one or two or three or five, I was buying blocks of ten.
Joe Fairless: Got it.
Steve Wible: Does that make sense?
Joe Fairless: It does make sense, yes.
Steve Wible: My brother was amazed. We were partners, and he said “How do you have X amount of hundreds of thousands in the bank already?” I’m like, “I’m letting Home Depot finance this. Why not?”
Joe Fairless: And then with this approach, what if someone has a business and the credit is shot right now? What do they do?
Steve Wible: The business credit?
Joe Fairless: Yeah.
Steve Wible: Well, there’s a couple of options. Time and greed is important. In other words, after you hit that two-year mark, you start noticing that the limits go higher and higher and higher… So I’d never tell anybody to shut down a business if it’s not necessary. If their business credit is shot, like unrepairable, then that’s probably your best option. Start a new company, different address, different phone number.
I’ll give you an example. Dun & Bradstreet, their reporting system – they give you a score. Have you heard of the PAYDEX score?
Joe Fairless: Yup.
Steve Wible: Okay. So 80 is perfect. I’ve seen people get approved at 78, 77… That means you’ve paid late a bunch of times. But as you add lines, what happens is that has less and less impact. Because business credit is strictly based on how you pay your bills. So if you’re late five or six times, five or six different vendors, but now you’ve added 20-25 vendors, you’ll be a 79 and you’ll be approved.
Now, the second part of that is if it’s not truly your debt – easily disputed. Easily disputed. I’ve seen that. And the third is, typically after three years it all disappears anyway.
Joe Fairless: What do you mean, “it all disappears”?
Steve Wible: If it’s not active, it just disappears. It just disappears off your report.
Joe Fairless: If your account is not active?
Steve Wible: Correct. Let’s say you’re negative and you didn’t pay your bill. Or you settled it, but you were 180 days late… A couple of years from now it’s gonna be gone. It’s not like personal, where it stays on there for 7-10 years. With the business credit it’s gone fairly quickly.
Joe Fairless: Got it.
Steve Wible: But again, if you have a negative — I’m not talking about a bankruptcy or a UCC judgment; that’s different. But when we’re talking about vendor credit, or regular credit cards, or even a vehicle, or things like that, you can add enough trade lines to certainly outweigh the negatives… Unless you just have so many negatives that I would look at your report and say “You know what – better off start a new company.”
Joe Fairless: When you work with someone who’s looking to do this process, what are some things that surprise them?
Steve Wible: That’s a great question. The first answer that jumped in my mind is how fast it goes. I’ll give you an example. I can show you a business credit report… And by the way, if you have nothing reporting – and this is important for your listeners to know – you will get a failing grade. Automatically, a failing grade. But even adding one trade line will bump your score all the way up.
I show an example during my webinars of someone who had a failing grade, it says high risk, because there’s nothing reporting, they added one trade line under $100, their score jumped all the way up, and they were recommended for $2,500 in credit.
Add three trade lines and it suddenly goes to $5,000. Ten trade lines, $25,000. $30,000. $100,000. It’s scalable. So that’s usually what surprised people, how quickly. Unfortunately, the beginning, when you first start, feels like it takes forever. It takes about 60 days, because you’ve gotta make sure you’re set up properly. Find the starter vendors, apply, get approved, buy something from them, then pay the bill and then they report. So you can imagine that takes 60 days.
Joe Fairless: Yup.
Steve Wible: So once they get through that though, it’s like a waterfall. It just keeps coming. And then what’s really cool about it – and this surprises a lot of people – is once you have enough trade lines reporting, the same thing that happens to you as a consumer begins happening to you as a business owner.
As a consumer, if you have 680-700 credit score or higher, you’re getting offers in the mail all the time. Credit card offers, personal loan offers… You’re always getting offers in the mail. Well, they don’t just magically appear. Those lists are being sold. Not your personal information, but “Hey, I wanna buy a list of people between 700 and 800 credit score in this zip code”, and then they mail you. Same thing happens in a business. So suddenly, instead of you chasing the money, the money is chasing you.
Joe Fairless: Based on your experience as not only a real estate investor, but clearly in the credit building business for businesses, what is your best real estate or business advice ever, as it relates to your area of expertise?
Steve Wible: My absolute best would be – I don’t care if you’ve been in business 20 years or you’ve just started today – make sure you set up properly, because that’s gonna hold you back. One negative, one thing that’s set up wrong will stop you from ever moving forward, and you’ll be frustrated all the time.
Joe Fairless: Can you fix it retroactively?
Steve Wible: Sure, I talked about it. Phone number… If you’re using your cell phone and it’s everywhere, get a virtual phone number; go back, fix your website… Wherever your phone number is listed, change it. Go to the IRS. Go to the Secretary of State. Wherever that phone number is listed. Because they can find that information in a matter of seconds. Not seconds, tenths of a second. It’s all artificial intelligence.
And the second piece of advice I would give is don’t fall for the shelf corporation scam.
Joe Fairless: What is that? Real quick.
Steve Wible: People buy aged corporations… I started an LLC which I still have, 20 years old. I could sell that. But it’s not like it was in the ’70 and ’80s, where the banks looked at your data of incorporation. Now they have access to everything, through LexisNexis. So they look at the date of your corporation starting as the day you opened your bank account. So if you have a 20-year-old corporation with a bank account that’s one week old, guess how old you are?
Joe Fairless: One week?
Steve Wible: You’ve got it. But if you put down 20 on the application, they’re gonna mark your file as fraud. And they will report it to Dun & Bradstreet as fraud.
Joe Fairless: That’s a problem.
Steve Wible: Once you’re marked on Dun & Bradstreet, there is no removal. Once it says “fraud”, you’re done. That’s it. Shut down the company.
Joe Fairless: We’re gonna do a lightning round. Are you ready for the Best Ever Lightning Round?
Steve Wible: I’m ready.
Joe Fairless: Alright, let’s do it. First, a quick word from our Best Ever partners.
Joe Fairless: Alright, what’s the best ever book you’ve read as it relates to your business or something relevant to real estate?
Steve Wible: Gary Keller, The Million Dollar Real Estate Investor.
Joe Fairless: Ah, yes. Okay. What’s the best ever way you like to give back to the community?
Steve Wible: The best ever way to give back to the community – back when I was flipping houses, I was giving away homes for homeless people. I’d fix up a property and give it to a homeless person. Obviously, through a charity, through a fund.
Joe Fairless: Sure. And how can the Best Ever listeners learn more about what you’re doing?
Steve Wible: Oh, that’s simple. Go to CreditSuite.com. If they wanna reach out to me, they can certainly reach out via email@example.com.
Joe Fairless: Steve, thanks for being on the show, giving us some specific tips for setting up our business credibility – virtual phone, address, website with email address and concurrency across all the internet with that stuff, as well as other things… And giving us some examples of what we can do with it as well. Thanks for being on the show, I really appreciate it. I hope you have a best ever day, and we’ll talk to you again soon.
Steve Wible: Alright.