Can I Use My EIN To Apply For Credit?

Can I Use My EIN To Apply For Credit?

An EIN is an Employer Identification Number that is made up of nine unique digits and assigned to business institutions by the International Revenue Service.

It is used to identify businesses for tax-related purposes. It is similar to a Social Security Number with the exception that it is intended for business use. 

Can I Use My EIN To Apply For Credit

As a business owner, when applying for credit, it is important to differentiate between personal transactions and business transactions. Your business credit should only be used to benefit your business. For example, you may require it for marketing or software, etc. 

Depending on the type of credit that you are applying for, your social security number may also be assessed as a factor. This will be used as your personal guarantee. As such, if your business was to go into debt, you will be responsible for covering these expenses. 

Whilst it is possible to use your EIN to apply for credit, certain requirements need to be met and many small businesses often do not qualify because they do not meet the criteria.

Although keeping business and personal credit separate is preferable for many, in the majority of cases, you will still need to undergo a personal credit check beforehand.

For this reason, it is also useful to have your social security number to hand when going through the application process. By default, many credit providers will ask for your EIN, though you will find some that primarily ask for your SSN.

Normally, you can use your EIN instead but your personal credit may still be checked. Remember that the lender will want to be paid back at some point so they will want to know that you have assets available to cover the bill, if repayments are not made by the due date. 

How does an EIN differ from a Social Security number?

Now you may be wondering how a social security number differs from an EIN.

Simply put, a social security number consists of nine digits and is issued by the Social Security Administration. It is used to identify individuals in the United States. 

What credit cards can you apply for using an EIN?

What credit cards can you apply for using an EIN

There are many lenders that will issue credit cards to those that have an EIN. When filling in the application for the credit, you will stumble across a section that asks you to record your tax identification number, i.e your EIN.

If you don’t have your SSN to hand you may need to broaden your search for credit looking for issues that don’t ask for an SSN. 

The rules and regulations regarding the repayment schedule and rewards etc. can differ between credit card issuers. As such, it is important to choose according to the needs of your business. 

How does an EIN-only credit card differ?

As anticipated, an EIN-only credit card differs from the above because you are not required to give your SSN or sign a personal guarantee. Instead, your business is liable for any debt that is accumulated.

Because you are not personally responsible for the debt, during the approval process, your credit isn’t going to be looked at and neither does it play an influential role in whether you are going to be approved or denied for the credit.

The factors that will be evaluated are the cash flow of your business along with spending habits and patterns.

The individual or institution is the most noticeable difference between a normal business card and one that only requires your EIN.

Building credit using your EIN

Some businesses may struggle to find a credit card issuer, especially those that are smaller.

For a stronger chance of being approved for credit, smaller businesses will need to have a good personal credit background.

You may also find that there are smaller banks available that are a lot more likely to lend to smaller companies. An EIN can be applied for online and is offered by the IRS and given free of charge. 

Final Thoughts

To answer the question, yes you can use your EIN to apply for credit. In some instances, you will also be asked to provide your social security number depending on the type of credit that you are applying for and the size of your business.

This is because you will need to prove that you are liable for any debt that the business accrues.

Some credit card providers will issue credit to those that only have an EIN without needing an SSN. In this case, your business will be personally liable for any debts that are accumulated.

If you own a smaller business, you may have to look harder for a provider that offers credit. You can easily apply for your EIN online and it will be issued to you free of charge. 

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