When you get a credit card tied directly to a store, it’s called a retail credit card. Common examples include retail credit cards from Lowe’s and Office Depot. Generally, you can only use these accounts at the specific store that issues the card. Some stores offer credit accounts with net terms rather than retail credit cards.
Retail Credit Cards and Accounts Can Push Business Credit Beyond the Beginning
There are a lot of steps to building a business credit profile that many business owners just don’t know. We do our best to help out in that area, but once you get started, you have to keep going. Building a fundable foundation is important, of course. You cannot have business credit without that.
Then, you have to get initial accounts reporting. That’s where starter vendors come in. Yet, you can’t stop there. That is just the effort it takes to build the snowball and get it to the edge. You have to push it down the hill if it is ever going to grow.
That is where you get to the next step after starter vendors. In the Business Credit Builder we call it Tier 2. This is where second step credit providers live.
Retail Credit Cards and Accounts: AKA Tier 2 Credit Providers
There are various types of credit providers in the Tier 2 category. These are credit providers that will approve you with limited business credit history or a personal guarantee. What really sets them apart is that they will report your on-time payments to the business credit reporting agencies.
Not all business credit providers do that. Many will only report late or missed payments, if they report anything at all. However, if you find those that report positive payment history, your business credit profile continues to grow. Your business credit score continues to grow as well.
This is how your business credit score can really take off.
Finding Tier 2 Retail Credit Providers
It can be a bit tricky to find these types of accounts. Despite the fact that most large retailers offer retail credit cards or net accounts, many do not make it easy to find out whether or not they will report. If you are working on building business credit, reporting on-time payments is vital.
That’s part of the value of the Business Credit Builder. There is a whole database full of Tier 2 vendors that report. We list them for you along with what it takes to get approval and which business credit agencies they report to.
Some will still extend credit, and still report to the business credit reporting agencies, even if you do not meet the requirements or do not have enough business credit history. The catch is, they will require a personal guarantee.
Retail Credit Cards or Net Accounts and a Personal Guarantee
Others will not require a PG, but it will make it much easier to get approved with minimal business credit history. This is why the first steps of the Business Credit Builder are so important. Without a strong business credit profile, you may be able to get approval with a PG. In contrast, if you build a solid foundation and business credit score with starter vendors first, you can get approval without a PG.
That right there is the secret that no one wants to talk about when it comes to retail credit. You do not have to give a personal guarantee to get it. There is another way. You can build a strong business credit profile before you apply.
It’s not that a personal guarantee is bad, per se. Sometimes you may need it to get started. Still, it does add more liability to you personally. So, if you can get away without it, why not?
Examples of Tier 2 Retail Credit
Here are just a few options from the Business Credit Builder.
Home Depot
Home Depot requires:
- An EIN
- Business address- matching everywhere.
- D & B number
- Business License- if applicable
- Business Bank account
They also like to see a minimum of 2 accounts reporting. But, they will look at the merit of the overall application, so minimum accounts reporting isn’t necessarily a deal breaker.
They also require a business phone number listed in the 411 directory and at least 3 years in business. The minimum PAYDEX required is 80, and you must also have a good Experian business score. You can request Net 60 terms after the account is established.
If there is not enough business credit history or you have been in business for less than 3 years, a Personal Guarantee(PG) is required.
Quill.com
Quill.com sells supplies any business can use in day-to-day operations, including office and cleaning supplies. For approval, they want to see:
- Business address- matching everywhere
- D & B number
- Business License- if applicable
- Business Bank account
- At least 3 trade/credit references
- A good D&B paydex score of 80 or higher
- That the business has been established for at least 6 months
New businesses or businesses with no credit history with D&B may need to pre pay purchases for 3 consecutive months until Net 30 is approved.
Office Depot
To get approval for Net 30 with Office Depot you must have:
- An EIN
- A business address- matching everywhere.
- Your business License- if applicable
- A business bank account
- At least 3 years in business
- A good D&B paydex score of 80 or higher and good Experian business credit score
If any above criteria is not met, a Personal Guarantee (PG) is recommended but not required.
Once you’ve got your 5 (or more) starter vendors reporting, you should be eligible for credit from these retailers. That is, assuming you have handled your credit from starter vendors wisely. As you can see, exact requirements for approval vary by lender.
Retail Credit Cards or Net Accounts and Building Business Credit
Many of these credit providers have more than one option for business credit. For example, they may offer net terms as well as a revolving account. If you do not qualify for the revolving account, you may qualify for net terms.
You can use the net account to help you build your business credit profile until you qualify for the revolving account. These examples can help you see what’s out there and what it takes to get approval. They make it crystal clear why building a fundable foundation and getting initial accounts reporting using starter vendors is vital.
Once you do so, you can get retail credit accounts from tier 2 reporting as well. This keeps the snowball rolling and growing allowing you to pick up bigger accounts with better terms. If done properly, the need for a personal guarantee can be kept to a minimum.
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