Which doesn’t mean they won’t be able to open a bank account. ‘Bad credit bank
accounts’ – also known as ‘basic bank accounts’ – are there to help people in that kind
of situation. They’re available to people who’ve had problems with their credit rating
and as a result can’t open the kind of bank account that comes with features like
overdrafts and cheque books.

They might be ‘basic’, but bad credit bank accounts still let people do the essentials,
like pay money in, arrange Direct Debits and withdraw money. A lot of them come
with a debit card as well, which can be extremely useful.

What if I’ve been made bankrupt?

If you’ve been made bankrupt recently and you’ve not yet been ‘discharged’ from
bankruptcy, you might find that even a lot of basic bank accounts are out of reach. If
this is the case, you’ll need to find one that’s open to undischarged bankrupts.

What if I want an overdraft?

If you can’t open an account with an overdraft, there’s probably not much you can do
about this – for the moment. Opening a basic bank account can really help you stay
on top of your finances and make sure your bills get paid on time, which can help
you improve your credit rating over time, so you can apply for an account with an
overdraft later on.

Having said that, do you really need an overdraft? If you’ve run into troubles with
your money in the past, having access to an overdraft might not be the best idea
anyway, if you’re trying to improve your money management skills. Many people find
that living without an overdraft makes it easier for them to stick to a strict budget -
and harder to get into debt.

Damian’s Company Stats

So I have worked on a company for Damian about 4 years ago but he was working on another company on his own. The company that he is currently building business credit with is now 1 year and 7 months old with an 80 paydex and 6 tradelines and a high trade of $400. The companies that he had accounts with were Uline(net 30), Grainger(net 30), Nebs(net 30), Rapid Forms(net 30), AT&T land line, Sprint Wireless(2 lines but approved for 10), Quill(net 30), Reliable(net 30) and Seton(net 30). At this point he thought he was ready to apply for some revolving vendor accounts so about a month ago he applied to Staples and Office Depot and they both denied him. We know that Staples now requires a 3 year old corporation, but we both were not sure why Office Depot denied him.

A couple weeks past and he did not know what to do. He did not want to go and get any more of those starter net 30 accounts and he did not want to get denied by anymore revolving accounts. He considered purchasing some business credit tradelines but simply could not afford them at the time. With nothing to lose he decided to apply to of the companies that offered revolving accounts but applied for their net 30 accounts. In the last two weeks he was approved for Staples Net 30 for $1000, Office Depot Net 30 for $1000, Pep Boys net 30 for $5000, Amazon net 30 for $6000 and a Tech Depot Net 30 account for $2000. He also asked the rep with Staples and Office Depot if it will be possible to upgrade to the Revolving Accounts in the future and they both said sure. One rep suggested that he can apply in 3 months but if his business credit file get stronger within the next month he can go ahead and apply.

We know that the goal is to get to those revolving accounts, but this just shows you what perseverance and creativity can do. I have no doubt that in the next few months he will have all those accounts on revolving terms as well as some gas card and a few cash cards.

Marc

Leaseback options have always existed but we are now seeing them showing up more and more in the business credit arena. A leaseback option is typically where the owner of a property(real estate, equipment ect.) sells the property, and leases it back from the buyer. Some leaseback options allow the seller, or lessee to buy back the property at a later date. If the seller files bankruptcy or is audited at anytime, the leaseback option can be deemed as fraudulent or a means of hiding assets by the seller and the leaseback will be reclassified accordingly.

In the business credit arena, we are seeing this term showing up more and more. What is happening is that consumers have limited options of acquiring large lines of cash credit and service providers are getting more and more creative in providing leaseback options. In this situation a leaseback option looks like this:

A client who has strong business credit and needs access to cash gets approved for a lease of equipment from a company that agrees to do a leaseback option. Lets call the client, ClientA and the company doing the leaseback option, CompanyB. ClientA goes to CompanyB with strong business credit and gets approved for; let’s say $50K; to purchase IT equipment. ClientA leases 50K worth of equipment from CompanyB and CompanyB buys back the equipment from ClientA for $45K. The financing for the 50K of equipment comes from an external source such as BankC.

In many cases a small amount of equipment is left with the seller but in some situations, no equipment ever changes hands. The legality of this has to be examined from various angles. The financing agreement from the Banks may or may not allow the seller to sell the leased equipment. Every case is different, but this is the basic drift of a leaseback option in the business credit world.

We have seen various deals come up like this that require and PG and some simply require very strong business credit. I suggest that when doing this kind of deal, you should work with parties that have experience and know exactly what they are doing.

About a week ago an administrator at Inter-tech emailed me clearing things up on what they have to offer. This company offers IT services but they also offer Net 30 account from $5k -$30k and they report the size of the account to DNB. You do not need a paydex but you do need a DUNS number and you need to be registered with DnB. This is a really good occasion to get a fairly big tradeline which is certainly needed in the modern business credit climate.

I checked their website today and it is currently going through maintenance but the Operations Manager assured me that they are good to go. I have tried them out with one of my clients and it worked out pretty well. After you are approved you have to make an initial purchase and then they will report it to you business credit file.

There website is http://www.itc123.com/

This is a NECESSITY if you are in the process of building business credit.

So why all out of nowhere I am saying that shelf corporations are necessary?Sears, Office Depot, and Staples have recently altered their requirements. What was once starter accounts in business credit have become complex to attain, as there revolving lines of credit now REQUIRE a 3 year old corporation, or you are required to provide a pg. Yes, check their online application. I have had success with applying to office depot by getting  their paper application and faxing it in without a pg, but when an account like staples is requiring a 3 year old corporation, it is time to take notice. There is still cash out there and now there are some of these lease cash back deals that are helping us by being creative with their structuring of their funding. Do not mistake me, it is not impossible to get business credit without a shelf corporation, but it is increasingly difficult. Now is the time to go the shelf corporation route as there is more financing becoming available in 2011; but that business credit funding is going to be for those guys who are doing it correctly.

When building business credit is a plus to do and we should :

1. Get a Business License – I know that many states do not require a business license to operate certain types of businesses. If acquiring a business license is not a HUGE pain in the butt, my suggestion is to get one. newly, more than one financier has requested one from a couple clients of mine. The ones that did not have it had to make available a utility bill, but in my view it does help. We had one bank that required it, so in this climate it is now an obligation.
2. Get a Website – Having a webpage may not seem like a must in business credit building, but as getting approved is a little more difficult we must have all our chicken in a row. DnB now shows and lists your websites on your credit file and I know of two banks in particular that uses the fact that you have a website as a factor in determining how credit worthy a company is. Getting a website can cost as little as $50, so do not take any short cuts with this one.
3. Get an actual phone line – It is a moment in time to do things the right way, and if you want to get credit like a real company; and you’re not; at the very minimum you should appear like an actual company. Remote call forwarding is out the door now. Although they do work, I do not suggest it. Many creditors want you to call back from the number you applied with. Vumber.com is an options but my suggestions is to sacrifice and get a basic business phone line. It will act as a tradeline as well as ensure that you are listed in 411 and you can be called and can call back from that number.
4. Get one of the DnB products – Yes, you read it right. Yes DnB has their scams, and it is not “necessary” for you to purchase from them but it is becoming harder and harder to get credit. If you are claiming that your company will do or is doing over $1,000,000 per year in revenue, paying $39 / month will no hurt you. If you are serious about getting business credit, suck it up and do what you need to do.

• There are a couple basic things that we should not do when building business credit, and as much as I talk about it, readers still mak ethe basic mistakes. Some of them are:

1. Do Not Use a UPS Box – I have said this over and over and I get calls about the same thing.
2. Do Not Apply for more than 3 accounts in one week – Although inquiries do not hurt your score on DnB, it does hurt your score on Experian business. Consistent applying will lower your intelliscore. A consistant increase in inquiries on DnB can quickly raise eyebrows and they will look closely at your company. Most of the time they will try to sell you a new product that you do not need and when you do not agree they can block your file. The hassle is not worth it. Simply take your time when building business credit.

• Those are just a couple of useful tips that are important in building business credit in these times…

So the second step is here. We now have a Texas corporation and I applied for the DUNS number online and got it in 24 hours. I next went to vumber.com and got me a virtual number for the corp with the right area code for the city it is in. I then went to listourself.net and got the phone number listed.

past 3 days I then called the 1800 number to update my dnb credit report. I waited until the phone number shows up in 411 for me to update the information so that the number on file will match the one  in 411. I ensured that the information updated included the fact that I have more than 10 employees and estimates that I will do more than $1MM in revenue for the year. I also requested my eupdate information with this same number.

Once I confirmed that my information was updated on eupdate, I then got the DNBi SelfMonitor Benchmarking – Monthly which is now $69 per month. What this did is allow me to keep an eye on who is pulling my credit, but what we actually want it for is to input the three credit references. This insures that we get an 80 paydex quickly, but we will still use our net 30 accounts that report in order to build a stronger file by having more tradelines. (if you do not know what I am talking about with the net 30 accounts, I suggest to go to the menu bar and go to the “Start Here” Link)

So we have the self monitoring but I am yet to input any references. The next step is to get some goods ordered from some of the net 30 accounts but the truth is, they will be pulling my credit so I do not want all this activity to happen to quickly. So I am waiting 3-4 days to start ordering from my  net 30 accounts. I will be posted next which net 30 accounts I am ordering from and how much I am spending so that you can follow me step by step.

Marc Augustine

Happy Business Credit Building