Re: Building Credit for one man Corporation

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Posted by Steve Carlson on December 31, 2000 at 00:23:24:

In Reply to: Building Credit for one man Corporation posted by Omo_Oba on December 27, 2000 at 11:02:05:

The following was posted as a reply to a simular question I had quite some time ago. I do not know who to give credit to but the information is good.


If your corporation does not have established credit track record, yes, you will initially be required
to guarantee personally.

However, on some loans, such as corporate line of credit under certain dollar amounts, after you
have had one open that is personally guaranteed, you can go back and apply for an additional line of
credit without the guarantee. Now you have two credit lines, one with and one without guarantee.
Only after establishing the second one without the guarantee, go back and close out the first one
without the guarantee if you wish.

Wells Fargo Bank has an LOC that will ONLY require guarantee and not financial statements and
corporate tax returns if the LOC amount is $50,000 or less. I am told Bank of America has a similar
program.

Yes, initially a guarantee is required. I have also been told (but have not personally tried this) that
you can sometimes negotiate a limited personal guarantee. The way it was explained to me is, you
guarantee the payments for a period of time...one year, for instance. And then after the year is up the
guarantee is removed.

It also helps to have numerous accounts with other creditors in order to strengthen the corporate
credit report.

Keep this in mind: Credit is built to a BUSINESS. That means a corporation should look, walk,
talk, and smell like a business. This means a business phone line WITH A 411 listing. This means a
business license.

It also means a corporate/business bank account. Prior to applying for credit you should have these
things, as most business credit applications will ask for these things. They don't all ask for all of the
above, just some, but it is best to have them beforehand.

Prior to having any of these, it is important to do the corporate "paperwork" that is needed in the beginning, which includes deciding who is president, secretary, treasurer, director, etc. It is also important to decide who will be signer on the corporate bank account, which should be opened prior to applying for credit. These are all reference points for potential creditors to "check you out" at the corporate level. There are several good books that explain the process of setting up shop in detail, up to and including the paperwork that should be done in establishing the corporation once it has been filed. Corporate resolutions are needed for almost everything, which can be found in a book/software called The Corporate Secretary. I found this at Office Depot and Office Max; costs about $20 for the book or the software. Has just about every resolution (permission slip) out there, and after a while you can figure out what to put into one if you need one slightly different from the ones they have created. (Another book I liked is Incorporating in Nevada, by Cort Christie. It also has resolutions in it, both as samples and as fill-in-the-blank forms for your use.) But keep in mind that I'm not a lawyer or CPA.

Step 1.
obtain a mailing address OTHER than your residence (mailbox etc. type okay 4 now but some
banks and creditors will ask for additional physical address. Give it and have the mail go to
mailbox.).

Step 2.
obtain a business listing in 411 information (address not required, only city of same as mailing
address) (hint: this can be a remote forwarded number, which can
ring to an answering service or someone's house, but the line must be a BUSINESS line to be listed
in 411 that is answered in the company name, such as XYZ Incorporated)

Step 3.
after obtaining corporate tax ID/EIN (a step of incorporating) and filing officers list (part of inc'ing
also), call Dun & Bradstreet 800-333-0505 and tell them you want to be listed. They will ask 5-6
questions:

Name of company, phone number, address of business
year started, president of corporation,
number of employees
* they will try to sell you their "investigative service" listing, which entitles them to dig into your
business' affairs. Not needed, just get the listing. If you have to pay for it, you got the wrong one.

Step 4
apply for:
Target Stores Commercial Acct
Chevron
Office Depot
Office Max
Staples
Sam's Club
Texaco
Home Depot
Home Base
JC Penneys Commercial
Kinko's
CompUSA

You won't get them all. Since you have no credit, they will probably ask 4 a personal guarantee.
Give it when necessary (only one corporate officer required - pick the one with the best credit); you
just want the accounts. Use them one time, pay the bill on time, and they will report your company's
credit history to D & B.

* Office Depot, Ofc Max, Staples = same bank. Don't apply 2 all 3 in same week.

You want 5 accounts reporting 2 D & B, after which D & B will rate your company. It now has
credit history. (Here's the catch: they don't ALL report to Dun & Bradstreet.)

Then go for Mastercard, Visa, and American Express, all of which will probably want personal info
on at least one officer. Not all MC/Visa's are created equal. Some just want to look at the officer's
credit, others want that officer to guarantee the account. Shop around.

This may take awhile, but Home Depot and Home Base are accounts you will probably need
anyway if you ever end up doing rehabs.

After obtaining the cards mentioned in the above steps, if you now apply for a corporate line of
credit, it will be much easier to get than if you start out with no previous accounts and apply for a
creditline first.


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