Savvy small business owners establish good personal and business credit. But some entrepreneurs find it additionally challenging to build credit because they are new to the United States and they don’t have a credit history here. How do they get started? A reader of the Nav blog writes:
“We have U.S. entity (in Ohio) established last year and in process filing first taxes. We are residents of Canada. Do have EINs. Would we be able to apply for the credit score in U.S. to see if there’s any. I understand that I can use EIN instead of SSN. Have U.S. based bank account established for Amazon store.”
There are two types of credit bureaus in the U.S.: consumer (or “personal”) credit reporting agencies, and commercial (or “business”) credit reporting agencies. They operate independently and you must establish credit separately with each.
Building Personal Credit Without An SSN
Let’s look at consumer credit agencies first. Consumer credit reports are created when you get consumer credit accounts that report account information to credit bureaus. So unless you have had personal credit accounts in the U.S., such as loans or credit cards, it’s very unlikely you already have a consumer credit report.
Technically, you do not need a Social Security number (SSN) to build personal credit in the United States. “Neither an EIN, which a business-specific tax identification number, nor an ITIN, which is for an individual, is considered a valid identifier for the purposes of consumer credit reporting,” says Rod Griffin, Director, Public Education for Experian, which offers both consumer and business credit reports. “However, an SSN is not necessary to have a credit report.”
If you can get a loan or credit card using your U.S.-based address, that account can start your consumer credit history.
“In order to have a U.S. credit history, they must have a U.S. lender open accounts in their names and subsequently report those account to Experian,” explains Griffin. “Once an account is reported, Experian will establish a credit history, and in time, that history can be scored. It typically takes three to six months of account activity before an account can be included in a credit score calculation.”
Getting that first account though, may prove challenging. Even though credit bureaus don’t require SSNs, some lenders will require one on the application. For example, American Express, Capital One, Citi and Discover require a Social Security number to apply for a card. Bank of America and Wells Fargo are more flexible. “ In general for business cards, we can accept the application as long as the country of operations is U.S. and they primarily do business in the U.S.” says Bank of America spokesperson Betty Reiss. And Jim Seitz, communications manager for Wells Fargo says, “A U.S.-based business-entity of a Canadian business could be considered for small business credit, yet the business owner applying for credit must have a permanent resident card (or green card) in order for us to proceed.”
More important than the SSN is the fact that most lenders want to see that applicants already have a solid credit score that meets their minimum requirements before they approve an application. You may find yourself in a bit of a catch-22 situation: you don’t have a credit history and as a result it’s hard to get your first account.
One approach would be to start with the U.S.-based bank where you currently have a bank account. Ask them if you can get a personal credit card or small line of credit to get started. Some banks or credit unions will let you secure a credit card or line of credit with a security deposit if you’re considered high risk. If you can’t get started with your local bank, there are secured card issuers that offer cards nationally. You’ll need to figure out which ones will let you apply without an SSN.
Business Credit and SSNs
Let’s look at business credit next. This process should be easier. As long as you have a U.S. address associated with your business, you can start to build credit using vendor accounts. You buy things that you need for your business from companies that will report your payment history to commercial credit agencies. Some of these do not require a SSN in order to get payment terms.
Another great way to build business credit is with a business credit card. However, those credit cards typically will review the owner’s personal credit when evaluating the application. Without a personal credit score, it’s going to be difficult to get started. So you may want to start building business credit using vendor accounts while you are building your personal credit using the strategies listed above. Once you have a personal credit score in the high 600’s or above, you can apply for a business credit card.
Though the process of building credit in the U.S. may seem a little daunting, don’t give up. It’s all part of the process of growing a successful business.
This article was originally written on May 2, 2018 and updated on January 20, 2021.