"The Top 10 Banks for New Businesses with Poor Credit Profiles"

Three-Tiered Approach to Securing Bank Funding for Entrepreneurs

As a Credit Specialist, I often advise entrepreneurs on the best strategies for securing bank funding when starting a new business. The key is to have a three-tiered approach, considering Tier 1, Tier 2, and Tier 3 banks. Here's a breakdown of what you should know:

Tier 1 Banks

• Chase Bank and Citibank are Tier 1 banks that use the FICO 8 scoring model.
• Capital One is another Tier 1 bank that pulls all three credit bureaus when opening accounts.

Tier 2 Banks

• Wells Fargo is a Tier 2 "community bank" that uses the Experian FICO 9 scoring model, making it easier to obtain funding.
• U.S. Bank is another Tier 2 bank that uses FICO 9, and its sister company, Elon Financial, offers long-term credit cards with 0% APR balance transfers.
• PNC Bank and Huntington National Bank are also Tier 2 banks that use Experian FICO 9.

Tier 3 Banks

• Navy Federal Credit Union is a Tier 3 credit union that uses Experian FICO 9, as well as its own internal scoring system.
• Connexus Credit Union is a Tier 3 CDFI (Community Development Financial Institution) that also uses Experian FICO 9 and is flexible in working with small and minority-owned businesses.
• Baxter Credit Union and Vidiian are Tier 3 institutions that use the TransUnion Vantage Score 3.0 model, which considers authorized users, rental payments, subscriptions, and utility bills.

The key takeaway is to start with these institutions, as they are more flexible in providing business credit cards and lines of credit, often without requiring 18-24 months of business history. This can give your new venture the funding it needs to get off the ground.

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