Business credit, such a mysterious topic… Most of us don’t understand it, but after this episode you should understand and use it. Business credit is established off of three indicators and through one of them you may already qualify, here’s a hint… You don’t need good personal credit. Tune in and take notes!
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Ty Crandall Real Estate Background:
– Director of Business Services at Credit Suite
– Internationally known speaker, author, and business credit expert
– Author of two books Perfect Credit and Business Credit Decoded and has been featured by Entrepreneur, Inc, and Forbes
– Over 17 years of financial experience
– Based in Land O’Lakes, Florida
– Say hi to him at http://www.creditsuite.com/
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Joe Fairless: Best Ever listeners, 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. We only talk about the best advice ever, we don’t get into any fluff. I hope you’re having a best ever weekend.
Because it is Sunday, we’re gonna talk about a special segment… That segment is skill set Sunday, where you come away – and I come away; I’m learning, too – with a specific skill that perhaps we didn’t have before the conversation, or we simply hone a skill that we had prior, and it gets a little bit sharper to help us be more successful.
Today we’re gonna be talking about how to get a line of credit for your business, so you can do more deals. With us today, Ty Crandall. How are you doing, Ty?
Ty Crandall: Good, Joe. How are you doing today?
Joe Fairless: I’m doing well, nice to have you on the show. A little bit about Ty – he is the director of business services at Credit Suite. He is an internationally-known speaker, author and business credit expert. He’s the author of not one, but two books on the subject, and he has over 17 years of financial experience. He’s based in Land O’ Lakes, Florida. With that being said, Ty, before we get into the nuts and bolts of how to obtain business credit for a real estate investing business, can you give us a little bit of background on yourself, just briefly?
Ty Crandall: We were just talking before the show – I know you’re out of Ohio, and I actually grew up in a small town in Indiana, and literally joined the military to see the world… They put me an hour and fifty minutes from home in Ohio. I got out of the military – I was doing medical there – and I’ve been in financial services ever since. I really found a passion with business credit. I found that a lot of business owners just don’t know much of anything about business credit, and I discovered it myself about going on seven years ago.
I’ve been passionate, and this is what I do – I get out there and teach everybody that will listen about exactly what business credit is and how they can use it to grow their business.
Joe Fairless: I certainly am intrigued… Before we dive into that, first off, thank you sir for your service in the military.
Ty Crandall: Thank you very much, I appreciate that.
Joe Fairless: Alright, let’s roll into the good stuff, let’s roll into business credit. We’ve got real estate investors on pins and needles, being like “Yeah, I want some business credit!” How should we think about it? How do we approach it?
Ty Crandall: Well, the one thing to know – and a lot of people don’t know; about 90% of the population doesn’t know – is that you actually as a business owner have three credit profiles. You have your consumer credit, which we’re obviously all familiar with TransUnion, Equifax, Experian… You also have what’s called “bank credit”, which is an internal credit scoring system that the bank uses to rate whether you’ll get a bank loan or not, but most commonly what you’ll run into is corporate credit (or business credit).
What business credit is is it’s basically an entire credit profile that’s linked to your business’ EIN number, the same as your consumer credit profile is linked to your social security number. But the biggest difference is that you are completely separate from each other, so you can build business credit without personal liability, you can build it without any kind of personal credit check, so no matter how good or how bad your personal credit may be, you can still get very high limit credit accounts using your business credit.
There’s a lot of benefits, but the biggest way to look at it is that you literally have two separate credit profiles. One comes down from your social security number, the other is right below your EIN number. In obtaining business credit, you can get really high limit accounts to be able – like you said – to fund your business, which a lot of real estate investors use to even purchase real estate.
Joe Fairless: Alright, please continue.
Ty Crandall: The way business credit works is ultimately very similar to how consumer credit works. With consumer credit you start with no credit profile on score; you obtain credit that reports to the consumer credit reporting agencies, you pay those bills as agreed, you’re issued a score. With business credit it just happens a lot faster. With consumer credit you have to have six months’ worth of credit reporting for FICO to even give you a score.
In the business credit world, as soon as accounts start to hit your business credit reports with Dun & Bradstreet, Equifax and Experian Commercial, then you’ll immediately be rewarded with a score. One of the huge benefits there is with consumer credit there’s five components that make up your FICO score. Things like length of credit history and credit mix – it’s very hard and convoluted, and it’s tough to get a really good score unless you have many years of well-disciplined borrowing. But with business credit, your scores are literally the reflection of how you pay. If you get accounts, you pay them as agreed, on time, you’ll immediately be rewarded with a good score.
Within 30 to 60 days those accounts report, you’ll get a good score. With some reported accounts and a good score, you can then continue to get higher and higher limit accounts. And again, all that it takes is just reported accounts that are paid as agreed. If you pay the accounts early, then you get an even higher score. Once this starts to happen, the credit reporting agencies then issue a credit report, if not already.
A lot of people have credit reports because the credit bureaus know who you are, but they have low scores or just no credit reporting because you’ve never done anything with it.
Experian, for example, out of 100 points scale with 100 being the highest will give somebody a 28 or 29 score just because they know they exist, but the person has not built any credit. The minute you start to build credit, your scores get high, the reporting agencies start to recommend you for higher and higher credit amounts. Then with about five accounts reported, you can then go into most stores. You can go into Staples and Home Depot and Office Depot… Almost every major retailer – Sam’s Club, Costco, BT, Chevron, Sunoco… They all offer business credit, and you’d be able to apply, leave your social security number off the application, forcing them to pull your business credit only, and then you’re able to get very high-limit accounts based on that established business credit profile and score.
Joe Fairless: How do you check your current business credit score?
Ty Crandall: There’s three different reporting agencies, as I mentioned: Dun & Bradstreet, Equifax and Experian. Anybody can go to our website, which is CrediteSuite.com/reports, and we have links to all three of them there. Or you can go to any of the three directly, and then pull your business credit report. It’s anywhere between 30-60 bucks with each reporting agency to see what’s on there. With Dun & Bradstreet, they have a service called iUpdate which is absolutely free. Go to Google, search iUpdate, and even see if Dun & Bradstreet knows you exist, if they have in information, if the information is accurate.
You can easily access your reports, and it’s important to note that so can anybody else. With consumer credit we’re very used to having to give permission for somebody to pull our credit reports, and that’s required under the Fair Credit Reporting Act that says that somebody has to have a permissible purpose to be able to access your information. But in the business credit world, literally I could right now pull business credit reports on any company with just their business name, and that report will say your employees, your revenue, it says your profits, it talks about any outstanding loans you have, anything that’s reported, your high credit limits, your recommendations – all of that is available to anybody that wants it. So not only could your listeners access their own business credit reports through Dun & Bradstreet, Equifax, Experian, they could literally pull their prospects, their clients, their competitors, as well as all of those other people can pull your listener’s credit reports the same.
Joe Fairless: I’m on Dun & Bradstreet’s website… Do you have to have the address and the city and the state and the zip code of the LLC?
Ty Crandall: Not typically. You will if there’s a lot of records with the same name. In my live Facebook and Periscope streams we do this all the time with people. What we’ll do is if you give me your business name, we’ll pull in the business name and you can see in the search if they know you exist, is it pulling up a record, or is it pulling up multiple records because there’s multiple businesses with the same or similar name. That’s where a city and a state helps to narrow it down. Nine out of ten times I type in a business name, the business name pops up, and that’s maybe the only one. Then the rest of the time there’s multiple records, and by knowing the city and state I know which one to pull. You can pull a report with only a name; if multiple names come up, that’s when the city and state becomes important to narrow down which company it is exactly that you’re trying to pull a report for.
Joe Fairless: You mentioned that once you have five accounts or so — is it “or so”, or is it definitely five accounts and you then can go into most stores, like Costco?
Ty Crandall: Each store, each retailer is a little bit different. You wanna get started the same: there’s really three different ways you can start building business credit. You start with what are called vendor accounts: Uline, Quill, Seton, Monopolize Your Marketplace – this type of vendors are unique because they do two things… They report to the business credit reporting agencies and they will give you credit even when you have absolutely none already. So you could go into Quill and order 50 bucks worth of office supplies, throw it in your shopping cart, go to checkout, and they offer an option of Invoice Me. If you choose Invoice Me, you could place that order without ever giving them a credit card; they then process your order. Sometimes, if you’re a brand new business, they may make you order one or two times before they do this, but in a lot of cases they immediately issue the credit, they send out your order, and then they invoice you. Then, as soon as you get the invoice, your pay your bill, they then report that to Dun & Bradstreet, and then once you have five of those accounts – which we call “payment experiences” – reporting across all three of the reporting agencies, so two could report to Experian, three could report to Dun & Bradstreet… That gives you a deep enough credit profile and score that most retailers will then start to issue you credit from that point on.
Joe Fairless: So we’ve got Quill, which I had to google because I’d never heard of this company… But it looks like an office supply store, like an online Staples, basically. So you could go to a company like Quill – that would be step one. You said there are three ways to build business credit. The first step is to have vendor accounts, and Quill would qualify for that. What’s the second way?
Ty Crandall: The second way is through Dun & Bradstreet’s credit builder. Dun & Bradstreet has a product called the Credit Builder. If you get on the phone with them, they’ll charge you $1,500 or $2,000 for it. You can also get it with a monthly subscription of about $150/month. What they’ll do is they accounts you already have and they will add it to your Dun & Bradstreet business credit report. Let’s say you’re paying a software company monthly for your CRM software. You can have that reported and then have an account added to your credit report you already have. That could then give you those initial trade lines. The only drawback is it only works with Dun & Bradstreet, so if you’re applying for credit where somebody pulls Experian or Equifax you still wouldn’t get approved.
So option one is still better, because it works across all three reporting agencies. But the Credit Builder can work for you if you’re applying for credit where they’re only looking at your Dun & Bradstreet reports, and you’ve gotten with Dun & Bradstreet, got with their Credit Builder and had a handful of accounts added.
Joe Fairless: If you are in step two of the three-way process to build credit, how would you know what the group is that’s eventually gonna give you the credit, what they’re looking for?
Ty Crandall: You won’t. It’s trial and error, and that’s why I recommend the vendor step. Building credit across all three reporting agencies is as important in the business world as it is in the consumer world. You never wanna have all your credit on TransUnion and nothing on Experian and Equifax in the consumer world. You can imagine the problems that would cause, especially in mortgages, where they’re looking at the middle of three scores.
It’s the same in the business credit world. Dun & Bradstreet – sometimes people will use it as a shortcut and it will help them in some cases… But in a lot of cases it can create issues because you’re only building credit with Dun & Bradstreet, not with Equifax and Experian. So if you have a choice, you wanna go the vendor account route… Which you do have a choice. You wanna go with the vendor account route – that’s the better, cheaper way to go, than trying to deal go with Dun & Bradstreet’s Credit Builder.
Joe Fairless: Okay, that makes sense… And just so I’m clear – I’m taking notes, I’m trying to track the three ways to build business credit. Number one is vendor accounts, for example Quill, and underneath vendor accounts you can go through Dun & Bradstreet’s Credit Builder and pay the $150 subscription; it might be what you need, it might not be what you need. So that’s number one. What’s the second way to build business credit?
Ty Crandall: The first way is to use those vendor accounts… To go out to Uline, to Quill to get those added.
Joe Fairless: Okay.
Ty Crandall: The second is Credit Builder. It’s to go through Dun & Bradstreet and pay them to have accounts you already have added, instead of going and getting new credit at reports.
Joe Fairless: So three ways to build business credit. One, vendor accounts, which is Quill. Two is you can go through Dun & Bradstreet’s Credit Builder, which may or may not give you what you need.
Ty Crandall: Right. Well, it will give you what you need only on Dun & Bradstreet’s reporting.
Joe Fairless: Exactly. But for our goal that we’re trying to accomplish, which is getting business credit, when we ultimately go to the company that we get business credit from, they might not recognize just Dun & Bradstreet, so it might not accomplish our goal.
Ty Crandall: Right. So that wouldn’t be your preferred method. Most of your listeners aren’t gonna wanna go that way either way, because there’s a hefty cost involved. And that brings about the third option, which we see a lot of investors choose if they have the credit to do so… Which is you have a good personal credit – a 680 credit score or higher – or you have someone around you that has good credit that will sign as a guarantor for your business. They come in, they use the credit, there is a personal guarantee, and they basically get approved for what are called cash credit cards.
Let’s say, Joe, for example, you’ve got a 690 credit score and you say, “Look, I wanna be able to build my business credit and also get financing to buy investor properties.” Well, you can come in and use your personal credit to qualify with a personal guarantee, to get 50,000-150,000 in unsecured credit, even as a startup. These are credit cards that report to the business credit reporting agencies, not the consumer. So you’re getting them under your EIN. You do have to have good credit for these, you do supply a personal guarantee, but the benefit is that even as a startup you can often get 50k, 100k, 150k in unsecured financing within a few weeks. It all reports to the business credit reporting agencies, so you’re getting actual cash credit you can use immediately, and in doing so it’s for building your business credit at the same time, because it doesn’t report to your consumer reports, it only reports to your business credit reports.
Joe Fairless: That sounds intriguing for sure, so let me make sure I’m understanding. You can get a cash credit card, and in order to do that you either need to have good credit or a personal guarantor, and you get that under your EIN for your business. And as a result of getting that, you can have a — what is the $150,000 unsecured financing in a few weeks? That’s the part that intrigued me.
Ty Crandall: Basically, what will happen is they’re going to mimic your highest credit limit account you have now. So let’s say that you have a credit card on your credit report right now with a $10,000 limit, through whatever – maybe it’s a Visa card, maybe it’s a Sam’s Club card, whatever. Then you’re gonna come in with this program and get about five of those kinds of accounts, that are Visa, Mastercard, AmEx. So you’re gonna come in, they pull your credit, they say “Okay, you’ve got good credit. You’ve got a $10,000 high revolving on the account now, so we’re gonna give you five $10,000 limit accounts. Maybe 10 or 12, right around 10.” You’ll have five cash credit cards that look just like a Visa card, Mastercard you’d use normally, but the difference with these is they all have 0% rates for usually 6-18 months, and they report to the business credit reporting agencies only. So you could max these out and have no impact on your consumer credit, because they’re only reporting to the business credit reporting agencies. Outside of those, they look and feel exactly the same as the consumer credit card that you’re used to. The main difference is they report only to the business reporting agencies.
Joe Fairless: If you have on your personal line of credit a credit card at most for $10,000 limit… And who’s “they”, by the way?
Ty Crandall: Well, there’s sources out there that do this. We offer a lot of different kind of business loans. For example, we work with a lot of different kind of lending companies. There are companies out there that this is all they do – they specialize in unsecured financing using these kinds of business credit cards and lines, that report to the business reporting agencies. So there’s at least 10-15 of these… I refer to them as finance companies.
Joe Fairless: Name a couple, please.
Ty Crandall: Credit Card Builders is one of them, for example. Capwell Funding is another one… Those are two, to name a couple. Hawk-Eye Management is another one that’s out there in that space.. There’s about 10 or more of this type of companies of good size, where all they do is move forward and help you secure this kind of unsecured credit cards, that also report to the business credit reporting agencies.
And not to self-promote at all, but if a customer wants to learn more, we don’t charge anything to help them secure this kind of financing. They can go right to our website, which is CreditSuite.com/getfunding. They can fill in their information there, and then based on their scenario of all the sources we work with – I think 15 more of these sources – we can then help them get placed at whatever is gonna give them the most amount of money. On quick review of their credit, we know who’s gonna give them the most money. We can help them through the whole process, and we don’t charge anything to do that – not on the front, not on the back end. So that might be a shortcut for your listeners.
Joe Fairless: I wanna come back to that one point, but the thought process I was having before I asked the question “Who are they?”, if I have a $10,000 personal line of credit and I say, “Hey, I’ve got an LLC now”, why would they give me five credit cards to match that limit of what my personal line of credit already is?
Ty Crandall: That’s a great point for a couple of reasons. This isn’t something you could do at a bank. It’s not something you could go to Chase or discover any of these sources direct to do, and that’s why these companies exist that help you through this process, because what they’re ultimately doing is they will be able to look at a report and know the best sources that will give you the highest amount of approvals and the best terms.
What they will do is they will go in and apply for these all around about the same time, so they’re not securing five times the amount of credit through one source; they’re not obtaining five credit cards through one source. They’re ultimately getting you five different cards through five different sources, and the way they’re doing it, the inquiries won’t prohibit you from being able to get approved for that much.
If you went in to your bank, for example, and tried to do this, they would give you one card that equals your highest limit. If you go to Wells Fargo, the bank beside it, they’re gonna see the previous bank’s inquiry and either not approve you or approve you for less. By the time you get to the third bank, you’re gonna be done.
What these sources will do is they will look through reports, and they know exactly who to go to to get you the most amount of credit. They do it in a timeframe where the inquiries won’t prohibit your approval of the other sources, and then in doing so they’re able to get you about five times the amount of what your highest credit limit is, or what you’d usually be able to do on your own.
Joe Fairless: Okay. So a lot of people don’t have one credit card that has up to $30,000, and if it’s five times, then 30k times five is 150k. You’d mentioned earlier 150k in unsecured financing in a few weeks – how is that possible for a regular listener who doesn’t have a $30,000 line of credit already with one credit card?
Ty Crandall: That’s what I mentioned… Look, somebody can get 50k to 150k, and that’s usually the range that we see. When you’re getting into somebody that has 700-750 credit scores, those people typically do have 10k, 15k, 20k dollar-limits or higher. We deal with a lot of customers that have 50k dollar-limits or higher at that point… But let’s say somebody doesn’t have that. Let’s say they only have 10k. Well, then they’re gonna get about five times that amount, which is about 50k. Let’s say they have a 5k dollar-limit; well, they’re gonna get about five times that amount, which is about 25k.
Let’s say they have them self and the guarantor, and the guarantor has that 10k dollar-limit, and they have a 5k dollar-limit. There’s a lot of ways to get to a higher number, including that your limits are higher, that you’re bringing in a guarantor and both of your applying being the most common two ways to get the higher limits. But it will typically mimic about five times the amount of your highest limit account, so whatever your listeners have as their highest limit revolving account, they’re gonna get about five times that. If they want more, they need to focus on contacting their card companies to get small increases to their limits, or even bringing in guarantors to help them get more.
Joe Fairless: Basically, let’s say they end up with, in total, 100k dollars, split up between five cards, so a 20k limit per card. If we’re buying a property for 100k, then we’d be maxing out each of those five — not to say we should, but this is the thing… In order to spend a hundred, we’d need to max out each of the five. How do we pay for a house on a credit card?
Ty Crandall: The same sources that help you go through that product or that program also have ways where you can get access to cash without paying the high penalties. Of course, anybody can just take cash out on the card and pay a higher rate to do so. You could do that with any credit card. But they actually have ways – and I’m not exactly sure how they do it – to access the cash from the credit card without paying the 20%-30% rates.
Joe Fairless: “They” meaning the Credit Card Builders, Hawk-Eye Management…
Ty Crandall: Yeah… I mean, Capwell is really one of the best that’s out there. But again, it really depends on the unique situation, and that’s what we found… We’ve worked with 20 or more of these different sources, and for every unique situation some are better than others. Does somebody only have two accounts, or do they have five? Does somebody have some derogatories, does somebody not? Each one of these sources is going to be different based on that person’s unique scenario, and that’s where I threw out that link, because we can always look at it and say, “Look, Capwell is gonna give you the most in your situation”, and help somebody through that process without them having to pay to do so.
Joe Fairless: Fascinating stuff. We’ve gotta wrap this up. Real quick, how does your company make money?
Ty Crandall: What we do is we have a business credit building program that helps everybody expedite this process. It gets them access to all different kinds of business loans and financing, including the unsecured financing we talked about, and a lot of others. We’ve got about 30 different types of loan products that people can obtain or can access to get capital for their business.
Then we also help expedite the business credit building process. We help everybody, even if they don’t have good credit, be able to build a business credit profile and score from scratch, to get to a point where they’re getting this kind of high-limit cash credit accounts without needing a personal guarantee, without needing a personal credit check, and we get them there in about 4-6 months, where they’re getting the high-limit Visa, MasterCards just based on their business credit quality, without that personal guarantee and without the personal credit check.
Joe Fairless: Ty, where can the Best Ever listeners get in touch with you if they wanna learn more?
Ty Crandall: Our main website is CreditSuite.com. If they go to CreditSuite.com/ein, there’s a great guide that maps out more in depth the steps to build business credit, offers more vendor accounts etc. Then they can always go to CreditSuite.com/getfunding and we can then get them pre-approved for the unsecured program we talk about, amongst the 30+ other funding programs where we can help them access capital as well.
Joe Fairless: Best Ever listeners, I hope you enjoyed this, as did I. As with all conversations, you’ve gotta do your own due diligence, do your own research. Ty, I appreciate you walking us through the three ways to build business credit. One is vendor accounts, for example Quill. Two is through Dun & Bradstreet’s Credit Builder; it costs a little bit of money, and it may or may not be relevant for what we ultimately need. Three is to have good credit or a personal guarantor and get a cash credit card under your EIN.
Thanks so much for being on the show. I hope you have a best ever weekend, and we’ll talk to you soon.
Ty Crandall: Thanks, Joe.