Electrical Estimating and Contracting: How to Obtain a Credit Line with Bad Credit. (Part II)

Updated: Feb 11

Electrical estimating and contracting. In part 1 you learned that having credit to buy materials helps grow your business.


In part 2 we explore how to obtain a credit line with bad credit.

If you have challenged credit, it does not necessarily mean distributors will not grant you credit. They may offer you a low credit limit.


They want and need your business but they also must limit their liability. Often times if you apply for a certain dollar amount of credit, they may refuse it but counter offer you a lower credit limit.

Example: You apply for credit at a national distributor chain like Graybar, WESCO, Rexel or Consolidated Electrical distributors. You request a credit limit of $25,000.00. They reject your application for $25,000.00 but offer you a credit limit of $5,000.00.


What if you have “challenged credit”?

Apply for a low credit limit.

  1. When you apply for credit, the credit application asks how many dollars credit you are applying for. Instead of requesting a credit line for $50,000.00, start out small. Ask for $5,000.00 or $10,000.00 credit. Tell the credit manager you have a low credit score.

  2. Ask them their opinion how much they think you could get approved for with a low credit score. They will tell you how much to apply for, or they will counter offer a lower amount than you requested.

  3. Even if it is only a credit limit of $500.00 or $1,000.00 that is GREAT! They will increase your credit limit as you consistently pay them on time! So that means PAY YOUR SUPPLIERS ON TIME! 

  4. Eventually, they will show you some love and bump up your credit limit. If they do not offer you a credit limit increase, ask for an increase after about 6 months.

Apply at smaller “mom and pop” distributors

  1. As opposed to national companies, small distributors may be more inclined to grant you credit. They often have more personal relationships with their clients. You can actually speak to the owner directly and the owner can influence the outcome of granting you credit. In other words, if the owner likes you, they will likely grant you credit.

  1. That is not to say that you do not need to apply at national distributors. You want credit there as well because as you expand your business you will want to have access to their extensive inventory. Apply at different distributors until you have at least 2 credit lines established. Keep going until you have credit set up at 3 or 4.

  2. Your relationship with your electrical supplier is a partnership. In that partnership, you find the jobs and execute the jobs and they provide the materials on credit until you get paid for the job and can pay them back.

It is a high-value partnership you should guard and nurture and protect because without it you cannot grow or sustain your business.


To be continued in part III – Electrical Estimating and Contracting: How to Set Up a Joint Check Agreement


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