Is new business credit based off of personal credit?

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dimond_dj
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Is new business credit based off of personal credit?

Postby dimond_dj » Thu Mar 10, 2016 4:14 pm

I started a part-time sole proprietorship kind of by accident. I wasn't really thinking about being paid because I have a full time job but it happened. I ended up having to register a trade name and get an EIN so I could open a business checking account. I don't really understand but my bank didn't give me a debit card for the business account. they said they didn't issue debit cards to businesses by default.

I was told I needed to open a business credit account but I've also heard applying hurts your personal credit score and you can be declined based on what's in your personal credit file. I've had a difficult time finding a secured credit card for myself but finally was able to get one. The same bank has a secured card for businesses but they want a $2,000 minimum deposit for a business credit card. My only choice has been to get a prepaid card, go to the bank to get cash, purchase a reload card for $3.95, put the money on the card then I can place an order online or over the phone, but I don't know how my taxes will work since I'm depositing a check made out to the business name in the business account, taking out cash, putting the cash on a card in my personal name then using those funds to make business purchases.

Also my part-time business income is low so I would assume they would rely on my full-time employment income. My bank told me I should look at Captial One Spark for business because they help businesses start out. When I tried to get a secured card from Bank of America, they declined me and said my credit score was 534.

Previous advice I was given was to just use the one secured card for a year but I wasn't taking the business into account. I have no clue at what point to apply for the Capital One Spark (to build credit for the business). Should I try to get unsecured credit for myself like the WalMart card and then wait say 6 months? I had originally thought about the Barclay card for fair credit but I'm guessing the Walmart card is an easier approval? I might have to bite the bullet and shop at walmart just to get some credit.


Tubpbs
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Re: Is new business credit based off of personal credit?

Postby Tubpbs » Thu Mar 10, 2016 4:32 pm

dimond_dj wrote:I started a part-time sole proprietorship kind of by accident. I wasn't really thinking about being paid because I have a full time job but it happened. I ended up having to register a trade name and get an EIN so I could open a business checking account. I don't really understand but my bank didn't give me a debit card for the business account. they said they didn't issue debit cards to businesses by default.

I was told I needed to open a business credit account but I've also heard applying hurts your personal credit score and you can be declined based on what's in your personal credit file. I've had a difficult time finding a secured credit card for myself but finally was able to get one. The same bank has a secured card for businesses but they want a $2,000 minimum deposit for a business credit card. My only choice has been to get a prepaid card, go to the bank to get cash, purchase a reload card for $3.95, put the money on the card then I can place an order online or over the phone, but I don't know how my taxes will work since I'm depositing a check made out to the business name in the business account, taking out cash, putting the cash on a card in my personal name then using those funds to make business purchases.

Also my part-time business income is low so I would assume they would rely on my full-time employment income. My bank told me I should look at Captial One Spark for business because they help businesses start out. When I tried to get a secured card from Bank of America, they declined me and said my credit score was 534.

Previous advice I was given was to just use the one secured card for a year but I wasn't taking the business into account. I have no clue at what point to apply for the Capital One Spark (to build credit for the business). Should I try to get unsecured credit for myself like the WalMart card and then wait say 6 months? I had originally thought about the Barclay card for fair credit but I'm guessing the Walmart card is an easier approval? I might have to bite the bullet and shop at walmart just to get some credit.



First things first, get another bank. You don't need a credit card because they said so. They're either lying to you, very stupid, or that bank just sucks for businesses.

Go to a regular bank and open an account for your business. They will immediately issue you a debit card and you won't have to worry about the rest of your inquiry.

Second, and much more important in my opinion, you need to get on top of your credit and find out all of the contributing factors that result in your poor credit and fix them one by one. It will likely be a long and complicated process, but from the information provided there is no way for any of us to know.

This forum is a great place to learn everything you need to know about credit repair and a thousand other things. Pull your reports as a first step ( if you don't know how, ask and the group will answer). Then find out what is reporting negatively and figure out how to correct it, if it's possible. Some things can be fixed, some take time and some need both, but there are 100 other things you can do in the meantime to help your profile as much as possible while time repairs it.

Let us know if you have any questions.
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