Fun With Business Credit Cards
Business holds a lot of promise for small business owners, but comes with some caveats. Before anyone gets too excited, allow me to temper your enthusiasm by saying most business cards are going to be based primarily on your personal scores for companies with less than 1 million dollars in revenue. If you are just starting out, then your personal will almost certainly be the prevailing factor as far as you getting approved.

For the beginner, your jaunt into the business realm starts with Dun and Bradstreet, the business bureau. Experian also has a smaller business directory as well, but D & B as they are called is king. The first thing you need to get is a DUNS number. A DUNS number is needed for any business to report, and the number is free.

Your goal is to get a Paydex score. A Paydex is a business FICO that ranges from a low of 0 to a high of 100. The goal is a score of 80, which equates to a 700+ FICO. Beware of the hard sell for builder. The reps will call and send emails incessantly trying to get you signed on for this builder program. They'll tell you that you only have a marketing file and you absolutely have to buy this program. The fee for the program will change from the $700 range to the $200 range and everywhere in-between. The truth is that companies report automatically, you can easily get a Paydex score for free, and the hefty commission for hawking the builder product is the motivation for the reps. In general, you need 5 companies to report to get a Paydex.

Credit scoring is also different than personal scoring. The main variable is how soon you pay something off. If you buy something and wait 30 days to pay it, your score will be lower than someone who pays it off in 5 days. Larger accounts count more than smaller accounts, so someone with a 100k balance will get more points for paying it off than someone with a 5k balance.

Finding companies to report is fairly simple. Start with the basic office supply companies like staples, office max, office depot, and Viking. They give easy to just about anyone and report. Wait roughly 45 days for these companies to report.

Once they report, move up to the Home Depot, Lowes, and Dell level.

These are slightly harder to get from, as they typically want to see a few positive trade lines first. Again, wait the requisite 45-60 days for all these companies to report before moving up to the next level: general use cards.

Getting a general use, regular card is much harder. Many companies look at both your personal and business scores, although some may only need to glance at your business scores to get an approval. Citibank generally will give you a general use card if your business file is strong enough. I personally got approved for three business cards with CITI and only had to endure one pull.

Advanta offers really great business card offers, with a lengthy promotional APR period, low rate afterwards, and overall very favorable terms. The flipside is that Advanta is also one of the most picky issuers, and they base much of their approvals almost entirely on your personal score. If you have any personal woes, you'll probably be declined, and this includes having more than 6 inquiries in the last 6 months, too many new accounts, or balances that are too near their limits.

There are two major benefits to having business cards. First, they don't report to your personal credit, unless you default, so expenses you may have bore that made you appear to be more risky or close to your limits will not show in the future. Secondly, many business cards come with travel and other rewards programs for gifts, concert tickets, or healthy cash back percentages.

For success, make sure your personal is clear, and follow the tips listed above. It doesn't take that long to build a business Paydex of 80, probably only 4-6 months at the most.

Chris McCullough is the founder of CreditcardSuperstar.com, a card shopping service which allows consumers to shop, compare and apply for low interest rate cards online. The leading site offers over 75 different cards from Discover, Chase, American Express and other top banks and financial institutions. A free report on how to get the best card and avoid common mistakes is available at http://www.creditcardsuperstar.com.

 
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