A business credit card for real estate investing: do you really need it?
There are two major things a real estate investor needs: easy, fast, and cheap funding and a good credit score to secure that funding.
Using a business credit card as a real estate investor can be the answer to both of these problems. Let’s go over exactly how a business card could change your career.
The Credit Benefits of Using a Business Credit Card
So, why business credit cards? They’re a no-brainer alternative to using your personal cards for your real estate investments.
Most real estate investors use a credit card to pay for the expenses involved in fixing up properties. Doing this, however, raises your balance, which increases your usage. Usage makes up 30% of your credit score, so keeping high balances on your personal card can significantly lower your score.
It’s important to get all investing expenses off your credit. It not only impacts your business, but it impacts your personal life, too. When you need a personal mortgage, or a new car, or a boat… Your lender will check your credit, and they’ll see the bad score if your usage is out of whack from your business.
A business credit card solves your credit problems in two ways:
- It helps your credit score. Moving these balances onto a business card takes them off your personal credit. Business credit won’t impact your personal score. This will allow you to get better outside funding.
- It’s a form of fast, easy, cheap funding. It still allows you the convenience of a credit card – and sometimes at a better rate.
The “best” business credit card for a real estate investor is one that does not show up on your personal report.
The Importance of Credit Score in Financing
In all financing, your credit score is the main driving force. Credit score decides:
- How many lenders will offer you money
- Your loan-to-values
- All terms and rates.
By raising your score, you get better financing. Better financing opens up more options for buying deals – you have more money available to you, plus more flexibility and speed in getting that money to buyers.
The business credit card is the simplest way to make that credit score jump for investors.
Business Credit Card vs Corporate Credit
Business credit cards are not like corporate credit.
You can apply for a business credit card and have it back in close to a week. Corporate credit cards are a bit harder. It involves building corporate credit and going through Dun and Bradstreet – which all takes months or years.
Business credit cards are easy, fast, and can be used every day. All you need is a business, and business name, a bank account, and a decent credit score. (Need to lower your usage to improve your score before you get a business card? Ask us about a usage loan.)
As soon as you get a business card, you can start using it to pay for contractors and supplies, which will free up your personal credit cards and raise your score.
Business Credit Card vs Personal Credit Card
One main difference between a business and personal credit card is that a personal one reports on your score and the (right) business one doesn’t.
For a personal card, you must keep your balance less than 30% of your limit. On a business card, you can max it out. In fact, credit card companies actually like when you use more of your business’s limit, and they’ll give you more credit for doing it.
Using a lot of credit is actually a benefit on the business side.
Making Real Estate Investing Easier and More Profitable
Our primary focus is making investing easier on the funding side. There are many ways to fill your “money buckets,” whether it’s business credit cards, HELOCs, real people’s money, or loans.
We want to help you with all of it. Reach out at Info@TheCashFlowCompany.com for more step-by-step help on business credit cards and other valuable funding sources.
You can also check out our YouTube channel for more info on real estate investing and funding.