Can you build business credit without a Social Security number?
Your Business Credit
Elaine Pofeldt is a journalist whose articles on entrepreneurship and careers have appeared in Fortune, Working Mother, Money and many other publications. She is a former senior editor at Fortune Small Business magazine and an entrepreneur herself, as co-founder of 200kfreelancer.com, a website for independent professionals. She writes "Your Business Credit," a weekly column about small business and credit, for CreditCards.com.
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Dear Your Business Credit,
Do I have to use my personal Social Security number to
establish business credit? -- Carmen
It's a great idea to actively work on building credit for
your business, as you're doing. Many entrepreneurs take out credit cards and borrow
under their own names, which helps them build their personal credit but does
not count toward establishing a credit rating for the business. Establishing an
excellent credit score for the business will help you get a better rate if you
need to get a loan.
To answer your question, you will need some sort of a Taxpayer
Identification Number (TIN) to establish business credit. This can be a Social
Security Number (SSN) or an Employer Identification Number (EIN) -- also referred
to as a federal tax identification number or a business tax identification
number. But to apply for an EIN, you need to submit an SSN. One other type of
TIN is the Individual Taxpayer Identification Number, which is available to
some immigrants, their spouses and dependents who can't get an SSN. The Internal Revenue Service
has more information on these numbers and how to apply for them.
If you have a co-owner of your company who does have an SSN and is willing to use it, you may want to have that person apply for the account.
To give you an idea of the type of identification you need
to secure some well-known business credit cards, I checked out a sampling of
credit card applications on CreditCards.com's business card page.
The application for the Capital One Spark Cash for Business card
asks you up front for both an SSN and an EIN if you have formed an LLC or
corporation. If you run a sole proprietorship, you will only have to supply an
SSN. There seems to be no way around providing a Social Security number in that
scenario. The application says, "Federal law requires all financial
institutions to obtain, verify, and record
information that identifies each person who opens an account to help the
government fight the funding of terrorism and money laundering activities."
The Bank of America
World Points for Business card application asks for an EIN, but says sole proprietors
can enter the owner's SSN instead.
Chase Ink Plus application asks for a TIN -- which
presumably means an EIN -- but says if you don't have one you can supply a
Social Security number. However, a Chase spokesman says an SSN is required to complete the application.*
Getting a business credit card and using it is not the only
step to building credit for your business. You may also want to open a trade
account with a store like Staples or Home Depot, if you buy supplies there. However,
some of these accounts may be hard to get without a Social Security number. A
Staples business account application requires you to supply an EIN, or an SSN
if you are a sole proprietor. For a Home Depot commercial account, you need to
supply one of those forms of ID as well.
When working on building credit for your business, don't
wait until two weeks before you plan to apply for a bank loan. It's not a
one-shot deal, and it can take a lot of time and paperwork to get set up with
the right identification numbers from the government. The good news is that
once you get everything in place, you probably won't have to repeat this work
again in the near future -- unless you happen to be a serial entrepreneur who
starts another business.
*Correction: As originally published, this article omitted the fact that Chase requires a Social Security number to complete an application for the Chase Ink Plus card. See the CreditCards.com corrections policy.
See related: Keeping business credit off of your personal record,
8 steps to build your business credit profile , How businesses can start on the road to credit
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Published: August 19, 2013