Why you should get business credit for your AOR!

I have seen a lot of discussion about not feeling comfortable getting business credit. I'm starting this thread to help clear some of the confusion and clairfiy some things about applying for business credit cards. Before reading this, here is the answer to your question: "Yes, you should get business credit cards!!!"

First, why business credit is right for you:

1) Business credit is hidden from your personal credit report. Therefore, your credit utilization is lower, your score stays higher, and you continue to get good mail offers even after your AOR (see lhendricks92 AOR 2.0 thread)! If you can move many of your personal lines to the business side (see Chase) and then draw from the business side, your credit score may still be high enough to allow another mini personal side AOR 4 months after your original AOR. Keep in mind you need to bump off those inquiries b/c business card apps do pull your personal credit report.

2) These cards have many of the best 0% offers (up to 15 months, see Advanta and Bank Atlantic)

3) Often, these cards give larger CL's than personal cards, so request a large BT on the application.

4) Business credit often is not included in the maximum exposure level a credit issuer will give you. For example, if you have 100k of personal credit at BoA, they may not give you more personal credit until your HHI goes up; but they may be very willing to give you more business credit as it is in a different category and satisfies a different need.

5) For those who appear to have reached thier maximum credit exposure across the board with most companies, try moving your personal lines over to the business side to hide some of this available credit. Then apply for more once your credit report is updated!

6) Business credit worthiness rankings care less about utilization and more about timeliness of payments.

7) Update: Per lhendricks92 and an extension of my point #6: From what is seen in the lack of adverse action on business credit, it appears this credit is viewed in a different manner than is personal credit. With business credit, it is often assumed you are using this credit as investment leverage and in order to grow your business. This is in opposition to personal credit, in which it appears the companies think we are all out spending our personal credit on "hookers and booze."

Now, many have seen this, but here is how you can apply for your new business credit cards:

If you do not have a business, and want to apply for business cards for 0% promos for personal use, just put Sole Proprietorship and your name as the business title, then use your SSN as the TIN. This is perfectly legal option (you can even ask the reps if you dont' believe me).

You are also the owner of a sole proprietorship, so you have authorization to make transactions and get credit. As long as you have ever sold anything (ie books, electronics, especially anything online (eBay/Amazon) that could be verified, or mowed someone's lawn and gotten paid for it) you are indeed a sole proprietorship. There is no filing with the state needed for a sole prop., and for tax purposes, your TIN is your SSN.

I DO NOT RECOMMEND using your day job as the business name unless you are an authorized officer to make transactions on behalf of your buinsess. Regardless, you should not be using your day job business as a basis for your personal 0% money either way. This is fraud and could land you in serious trouble with the credit card company and your job and the government.

Also, just put $0 revenue and 0 years in business if this is the truth (There is no problem with getting credit for a start up company). I have done this with applications before and received 9 of 9 business credit card approvals with business credit lines totaling over 120k. They care more about your personal score/report than your business revenue. GO FOR IT! UPDATE: The 0 years in business/$0 revenue may not work so well anymore due to the credit crunch.

To summarize:

Business type: Sole Proprietorship
Business name: Your exact name here
Tax Identification Number: Your social security number here.

**Do not lie about your revenue/business income if asked (never lie about anything). Be honest, it doesn't mean you will get rejected. It could just mean you are a startup to the credit company.

If others have more good reasons or info about business credit, post it and I'll update this thread. (Thanks lhendricks92 for advocating business credit so much, which is where I learned some of its finer points of importance)

UPDATE: Here is how you can get the $ from many of the business cards you will apply for:

1) Advanta - Direct deposit to your personal checking.

2) Chase - Write included BT check with card to yourself and deposit it in your personal checking.

3) Citi - Either wait for the welcome package (2-4 weeks), or call and request a check made payable to your name and deposit it in your checking (7-10 days).

4) Bank Atlantic - Must send $ to another card/account, but it can be a personal card/account.

5) National City - Call in and have check made payable to your name and deposit it in your personal checking.

6) Discover - Call and request BT checks, write it to yourself and deposit it in your personal checking.

7) PNC - They should include one BT check with your card you can write to yourself and deposit in your personal checking.

***You can almost always call in to any card and request more blank BT checks be mailed to you (make sure you call from your home phone number). Keep in mind they do expire (ususally within about 60 days, sometimes less), but they can come in handy and reduce BT delays.

Great job OP

Thank Mike for starting this thread as you promised!!

I would suggest we should add more value to this thread by maintaining a list of business credit cards in the Quick Summary section that issued credit lines especially when the business income was put in as zero. This will be helpful for people who plan to add business cards to their AOR but do not have a revenue generating business.

agentpt5 said: Be careful though.

Many banks checked my D&B reports in my last AOR. I even received a call from D&B asking if everything was OK, because multiple entities requested my report.

So, if you are applying for business AOR, I think you really should have a business, with business license, and all proper registrations.

What is the easiest start-up business for generating high revenue? Even if the the business generates an operating loss, this would be good info to keep us honest when doing AORs.

Sammy

Nice post Mike.

ChumChurum: As a general bit of advice, just be honest with your information and if they approve you great, if they don't then at least you tried. As for BoA, my mom received a preapproval offer (from hitting the online preapproval search button) for the BOA power rewards business card with a $25k credit line. Again, she has $0 revenue, 0 years in business for her sole properitership. For your second point, the only business card that I am aware of as of now that reports on yoru personal report is the Citi Professional card (this is really a hybrid card though). However, even if you can't consolidate from the Citi Professional, this card gives some of the juciest lines I have seen (my family has received two 25k and one 20k line from this single card alone with no BT request on the application). And with the 15k TY points, this is one, if not the best card out there to apply for in a AoR (not to mention the decision has always been instant for me, which gives a lot of instant satisfaction!).

If there are other business cards out there that do report on your personal credit report, post them please and I will find a way to update the OP with them!

Hindustani: I will add some of the results from the $0 revenue/0 years in business applications from my mom to this thread. I'm also going to start my "Triple AoR Assault" thread soon (I just fired off the third AoR hours ago and am still winding down from it.) I'll try to PM a link to you if I can remember.

agentpt5: You definately do NOT need to have any licenses or registrations to have a very, very successful business AoR. Just be honest with your data and follow my above guide and watch the credit lines roll in!

Kittenmittens: There is no situation I am aware of where you have to have any special registration or license to be a basic sole proprietorship for AoR purposes. Your actions of conducting any type of business on your own behalf implictly create a sole proprietorship. I agree that others should not lie whatsoever on thier applications, and there really is no need to as can be seen from the data out there. Those with newly declared businesses with no revenue can still get very sizable credit lines. It appears to reflect more on your personal credit worthiness than your business data with regards to business application success.

sammy1224 said: agentpt5 said: Be careful though.

Many banks checked my D&B reports in my last AOR. I even received a call from D&B asking if everything was OK, because multiple entities requested my report.

So, if you are applying for business AOR, I think you really should have a business, with business license, and all proper registrations.


What is the easiest start-up business for generating high revenue? Even if the the business generates an operating loss, this would be good info to keep us honest when doing AORs.

Sammy

I don't think that what business you run matters, as bankers look at personal FICO score anyway. What I am saying is that people should dot the i and cross the t. If you are going to claim that you are running a business, then it is reasonable that you will be able to provide evidence of such business and activities related to it. Evidence can include: a business license will be filled in your county office saying that you indeed have a business; business tax return; DNB and other registrations, etc.

this is the next area i'm planning to gain knowledge in. information here at FW is scattered and limited, much more can be found at creditboards, but it's overwhelming. so this thread is a great idea.

i hope more info gets posted, like about business credit reports from the 3 bureaus, d&b, which cards report to which personal or business reports, etc.

Great post. Many people often wonder if they can get a biz card without actually running a business. Lots of great helpful tips.

Hindustani said: MikeR397 said:
Hindustani: I will add some of the results from the $0 revenue/0 years in business applications from my mom to this thread. I'm also going to start my "Triple AoR Assault" thread soon (I just fired off the third AoR hours ago and am still winding down from it.) I'll try to PM a link to you if I can remember.


Thanks Mike I was wondering what kind of credit scores you mom had before the AOR? Looking at the business lines she got I won't be surprised if she was in her 800s. Anyways, I am sure you are going to list all that in your upcoming Triple AOR thread; I will look forward to it.Nope, the FICO from creditreport.com (EX I believe) was only 749 for her when I applied (updated quick summary with this). She does have a long credit history (20+ years) and does have a few large lines already, but there is one 30 day missed payment from 2 years ago on a retail card (they never sent us a statement), which is what is causing her score not to be higher. I'm still waiting for some more results to roll in for my family's recent AoR to make a more detailed post, but its coming (and looking big!) .

This is where I got my infor to get started as far as business cards go... might be useful to others here on FW finance as we turn to business credit:
http://consumers.creditnet.com/Discussions/credit-talk/t-business-credit-the-backdoor-appro-16341.html#post111392

If you are doing AORs and investing, this might give you a new line... that "investment" activity might be enough for you to form an LLC or corp doing AORs as a business, and perhaps more than doubling the money you get to play with!

opmnxtc said: that link is outdated with almost no activity for a year.

Most of the info is old, but still good. I'm not suggesting anyone post to it, but use it as a reference for our discussion here. As some people already posted, Business credit has not been explored much here on FW Finance and many people are eager to take their AORs to that level.

I'm just sharing my source of info, which as worked well for me.

ThornnSpear said: 411 listing is important for getting some business credit... so if you have a registered business name, try this:
http://www.gaebler.com/How-to-Register-a-Business-with-411-Directory-Assistance.htm

First, go to the List Yourself website. This site bills itself as "The Listing Service for the Unlisted" and while it appears to be a very simple site, many small business owners have told us that it has worked for them. However, some have not been successful with this service and others have had to enter their information multiple times before it worked. Still, it's a free service so it's worth a try.

Second, go to SuperPages.com and register your business for a free listing. You will find the "FREE Listing" link on the left nav on the home page.

Third, you can contact Verizon Wireless at 1-800 722-0577 and ask for a "foreign listing" - you don't actually have to have a Verizon number to get into their wireless 411 directory. There is a one-time $9 fee and a $1.12 monthly charge.

Fourth, you can call your local 411, ask for your listing and then when you are told that there is no such business listing, tell them you are the owner of the business and ask them how to get listed. In the worst case, you can a new number with your local phone company and have it forward to your other numbers. It costs money but it might be worth it.

411 information tends to propagate so getting into one 411 directory may be sufficient. Have a 411 listing and being in the various online 411 directories (e.g. whitepages.com) doesn't ensure that you will be in the printed White Listings directory. For that, you will need to call the company that puts out the White Pages.

As you move forward to get a business number listed in the White Pages and 411 Directory Assistance, be careful what you wish for. Once you do get listed, you'll tend to get a lot of inquiry calls from people trying to sell you stuff.

Hopefully, the number of calls from prospective customers will far outweigh the calls from telemarketers. But, importantly, if you want to build up your business credit profile, getting listed is an absolute necessity.

I signed up for Skype in and out, and registered with List Yourself... previously I just got an 800 through ATT for about $18 a month and had it forward to my cell phone. The new way is cheaper, if List Yourself actually works. You can enter any name as the business name, so you could probably list a business with your own name.

Great ideas, thanks!

Another issue I want to add to the OP is how to handle the taxes resulting from profits on a business credit card AoR. I have read several different viewpoints and want to see if we can get to a consensus. Below is my current plan of action/theory when it comes to sole proprietorship credit card interest (please advise me with your viewpoints):

1) The credit cards are applied for as a sole proprietorship.

2) The BT money is deposited into a personal savings account. All interest is earned in a personal savings account and there are no earnings whatsoever in any business account.

3) You get a 1099 from the personal savings account at the end of the year showing all interest you have earned.

4) You simply include this income in your own personal tax filing and don't need to file any sort of business tax return as it is a sole proprietorship, and second, the interest was earned on the personal side of things with only the loan originating from this business side.

This is my ideal way to handle the tax situation. I realize I may be oversimplifying it, and if so, I want to hear your inputs. This info will be very helpful as an addition to this thead. Thanks to those who contribute.

I wish there was a way to vote for what becomes a sticky, rather than "just" green. Mike, this is tremendously helpful and a great resource. Had it not been for your commentary, I'd have missed out on at least 20k from my wife-o-rama (just got approved for BofA).

So far Cap One has given me a credit card with 0% for a year. They apparently don't report to anyone unless you are delinquent so also good for reporting purposes.

They are also relatively easy to get credit with.

ThornnSpear said:
If you are doing AORs and investing, this might give you a new line... that "investment" activity might be enough for you to form an LLC or corp doing AORs as a business, and perhaps more than doubling the money you get to play with!

Say you form an S corp, do an AOR, open a brokerage account in your company's name, do your homework /analysis and invest the BT money with the full intention of paying the AOR money back.

But say, your investments turn sour and you can not pay the BT money back.

In this case, as a C corp, are your own personal assets and your own credit still shielded?

(I am assuming no fraud is intended and this is a good faith investment gone wrong)

No matter what the structure, almost every credit card requires you to sign a personal guarantee. The only ones you might be able to not give a PG would be store cards which are pretty useless for AORs.

For those of you concerned about depositing sole proprietorship checks into your personal checking account:

1) File for a DBA or Fictious Name in your state... in NJ its ~$50
2) Open a free business checking account locally
3) Get a separate business savings or brokerage account. For the small players, Cap One has a Money Market fund that pays 4.5%, its higher if you are a costco executive member. ING just rolled out their business accounts (http://business.ingdirect.com/). NB: ING allows ACH transfers, Cap one makes you deal with checks and the USPS.

Just speaking from my experience, AOR vets might be able to steer you to higher yields.

ThornnSpear said: No matter what the structure, almost every credit card requires you to sign a personal guarantee. The only ones you might be able to not give a PG would be store cards which are pretty useless for AORs.

For those of you concerned about depositing sole proprietorship checks into your personal checking account:

1) File for a DBA or Fictious Name in your state... in NJ its ~$50
2) Open a free business checking account locally
3) Get a separate business savings or brokerage account. For the small players, Cap One has a Money Market fund that pays 4.5%, its higher if you are a costco executive member. ING just rolled out their business accounts (http://business.ingdirect.com/). NB: ING allows ACH transfers, Cap one makes you deal with checks and the USPS.

Just speaking from my experience, AOR vets might be able to steer you to higher yields.Why even mess with getting a business checking or savings? I have never had any problem depositing business credit card balance transfers into my personal checking account. So why the extra effort and complication? Not to mention by doing this, then you do have business profits and would possibly complicate tax filing.

theman2 said: I took advantage of this on my last AOR, getting a couple 0% Citi Business cards and getting them to cut me checks.

Even though I registered as a Sole Prop, they issued the checks under my 'business name' which was Lastname Ent.. I was a little concerned but I was able to deposit these into my Wamu checking account through the ATM machine. YMMV, obviously.

Ahhh. 0% loans that do not show up on my credit report! Remember, utilization % doesn't really matter as it never hits your credit report.

I took advantage of 0% deal on my Citi Professional Card, but the balance on the card shows up on my credit reports. Just be aware!

MikeR397 said: peeps4life said: Does BOA business report to personal credit?No, not for me.
me neither