USA   |   UK   |   Australia   |   Canada
ADVERTISEMENT

Can you build business credit without a Social Security number?

By

Your Business Credit
Your
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.

Ask Elaine a question or read her prior answers in the 'Your Business Credit' archive.

Question for the CreditCards.com expert Dear Your Business Credit,
Do I have to use my personal Social Security number to establish business credit? -- Carmen

Answer for the CreditCards.com expert Dear 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. Similarly, the 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

Meet CreditCards.com's reader Q&A experts
Vexed by a personal finance problem? CreditCards.com's Q&A experts answer questions from readers every weekday. Ask a question, or click on any expert to see their previous answers.
Gary Foreman, New Frugal You columnist Gary Foreman,
"New Frugal You"
Sally Herigstad, To Her Credit columnist Sally Herigstad,
"To Her Credit"
Tony Mecia, Cashing In columnist Tony Mecia,
"Cashing In"
Barry Paperno, Speaking of Credit columnist Barry Paperno,
"Speaking of Credit"
Elaine Pofeldt, Your Business Credit columnist Elaine Pofeldt,
"Your Business Credit"
Erica Sandberg, Opening Credits columnist Erica Sandberg,
"Opening Credits"

Published: August 19, 2013


If you are commenting using a Facebook account, your profile information may be displayed with your comment depending on your privacy settings. By leaving the 'Post to Facebook' box selected, your comment will be published to your Facebook profile in addition to the space below.

Three most recent Your Business Credit stories:

Share This Story




Follow Us!


Credit Card Rate Report

Updated: 07-29-2014

National Average 15.03%
Low Interest 10.37%
Balance Transfer 12.64%
Business 12.80%
Student 13.27%
Cash Back 14.91%
Reward 15.00%
Airline 15.46%
Bad Credit 22.73%
Instant Approval 28.00%

ADVERTISEMENT
ADVERTISEMENT