In this week’s episode of The Law Practice Doctor, Sam Gaylord interviews Ty Crandall, who is an internationally known speaker, author, and business credit expert. With more than sixteen years of financial experience, Ty is the CEO of Credit Suite and is recognized as an authority in business credit building, business credit scoring, and business credit repair. During this episode, Ty and Sam discuss the three types of credit, applying for business credit, vendor accounts, alternative lenders, The Fair Credit Reporting Act, and how to fix bad credit.
Main Questions Asked:
- What is business credit?
- What are the steps to obtaining business credit?
- How long does it take to establish business credit?
- What is an alternative lender?
- Does the entity structure matter when looking to build business credit?
- Is there a way to fix business credit?
Key Lessons Learned:
Three Types of Credit
- Linked to your social security number and used for mortgages, car loans, and personal credit cards.
- Businesses have their own profile and credit score.
- Every business has an EIN.
- Internal credit the banks have that they use to decide if you are ‘lendable.’
Applying for Business Credit
- Any business can obtain business credit.
- Leave your social security number off the application.
- If you include your social security number on the application, you have personally guaranteed that debt.
- Make sure you have a business address, website, professional email, business phone number.
- Check your business credit report.
- These are companies that will give you initial credit to buy their products or services.
- They report to the Business Credit Reporting Agency.
- These include Uline, Quill, Reliable Office Supplies, and Monopolize Your Marketplace.
- When you have 5 accounts reporting, you will have a credit score.
- It takes about 60-90 days to get a score.
- When you have 10 total accounts reporting, you can start getting real cash credit.
- Get approved.
- Use the credit.
- Pay the bill.
- It takes 30-90 days to report to the agencies.
- It takes about 120 days of total time to get the point of getting Visa/ MasterCard cash credit accounts.
- This is any type of financing that is an alternative to SBA conventional financing.
- The issue is that the business space is risky and has a high-percentage fail.
- Conventional lenders look for your weaknesses, but alternative lenders look for your strengths.
- Any business looking to build business credit should focus on a Corporation or LLC.
The Fair Credit Reporting Act (FCRA)
- This requires that every item on a credit report meet the following criteria:
- 100% accurate.
- 100% timely.
- 100% verifiable
- Creditors often don't play by the rules and intentionally manipulate information on the credit report.
- If you go through the process of disputing any negative items on your credit report with the bureau, 80-90% will often get deleted, as they don’t meet the above criteria.
- If you have credit issues, focus on writing letters to the credit bureaus and issuers disputing items.
Fixing Business Credit
- Most slow pays don’t get reported unless you default.
- Get a hold of your business credit reports.
- Dispute directly with the creditors and credit bureau.
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Links to Resources Mentioned:
Dun and Bradstreet
Monopolize Your Marketplace
Credit Suite (YouTube)
Perfect Credit (book)
Business Credit Decoded (book)