EIN-only business credit: what is real and what is a scam

"EIN-only" means credit approved on the business's record without your Social Security number, your personal credit, or your personal guarantee. It exists. It is also the most oversold phrase in small business finance.

What is real

• A business can earn credit in its own name. Once a company has revenue, a few years of history and a file showing it pays on time, some suppliers and lenders will extend credit without looking at the owner.
• Some supplier accounts start that way. Trade terms from a supplier (pay in 30 days, say) are sometimes granted on the business's details alone, often with a small first limit. See net 30 vendors.

What is not

• New companies are judged by their owners. The SBA's own guide says loan eligibility for a new business is typically based on the owner's personal credit score. A package promising large EIN-only limits to a company formed last month is selling something lenders do not do.
• A guarantee is the price of early credit. Most early business loans and cards ask the owner to guarantee the debt personally, so the owner pays if the business does not. See personal guarantees.

The scam to walk away from

Some sellers tell people with damaged personal credit to get an EIN and put it in place of their Social Security number on a credit application, or to buy a "credit privacy number" (a nine-digit number sold as a new credit identity). The EIN is the business's tax number, issued to the business for its taxes; the IRS's own online application asks for the responsible person's Social Security number or ITIN.

Putting a false statement on an application to influence a bank or other insured lender is a federal crime under 18 U.S.C. 1014, punishable by a fine of up to $1,000,000, up to 30 years in prison, or both. Whoever sold the plan is not the one who signed the application.

Red flags in any EIN-only pitch

• A fee to "unlock" vendors, lenders or limits.
• A promise of a specific limit or score by a date.
• Advice to leave your Social Security number off an application that asks for it.
• A seller who says your personal credit will never matter.

If personal credit is the problem, fix that directly: Credit Help has the steps for errors, collections and disputes.