Can you build business credit without a Social Security number?
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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. 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.
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