Tag Archive for: business credit card

Credit Scores Explained

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Credit scores and loans

Understanding credit scores is critical in your journey as a real estate investor.

Lower credit scores mean you might not get a loan you’re applying for. Or you might have to put more money into a deal. If you have a bad credit score, you’ll typically see higher rates or terms which make dealing with the market frustrating. 

If you’re a real estate investor or even business owner, it’s okay to use your personal credit for your business. But it’s absolutely critical for you to understand how credit scores work.

Using personal credit works, but you want to be careful not to run it up to where you’re handicapped with higher rates. Higher rates quickly turn into higher down payments and costs overall. 

You want to build your credit score so it works for you instead of against you.

How Credit Scores Work

Credit card usage is the leading reason we see for low credit scores.

Surprisingly, the amount owed doesn’t affect the score nearly as much as the ratio of usage compared to the available balance.

For example, if two people owe $1,000 on their credit cards, you might expect similar credit scores since they owe the same amount. But that isn’t how it works!

Their FICO credit score will reflect the difference in their credit limits. 

Here’s how it works:

Let’s say Person A has a credit limit of $2,000, resulting in a 50% credit usage ($1,000 owed divided by $2,000 credit limit). In contrast, Person B owes $1,000 but has a credit limit of $5,000. Person B then has only a 20% credit usage ($1,000 owed divided by $5,000 credit limit). 

FICO and other credit-rating agencies consider credit usage ratios when determining credit scores. They want you to use your credit cards, but not too much. Therefore, FICO will typically raise your score when you have usage between 20%-30%. 

This can get complicated, and we recommend moving everything to a business credit card. Keeping your personal credit score separate from your official investing credit can save significant stress if your personal score dips.

If you do choose to continue using your personal credit for your business, it’s important to make sure you understand how usage affects your score.

Read the full article here.

Watch the full video here:

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How a Business Credit Card Can Change a Real Estate Investor’s Career

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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.

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How to Fix Credit Usage Quickly

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High usage lowers your score. Here are 3 ways to fix credit usage quickly.

From our 20+ years of working with real estate investors, the number one reason we see them pay too much for funding is their credit scores are artificially lowered by their normal business needs.

How does this happen? And how do you fix it?

How Usage Impacts Your Credit Score

Many investors put their business expenses on a personal credit card. As long as it gets paid off eventually, no problem, right?

Unfortunately, when the ratio between your balance and your credit limit is high (aka, credit usage), your credit score takes a hit.

But you need credit cards to keep projects (and your business) growing.  The problem is: you either have to wait until you pay off the cards after selling the current project to start your next project, or… Pay over-inflated prices for money.

Let’s look at 3 ways to fix that.

3 Ways to Fix Credit Usage Quickly

  1. Move the cards off your personal name and onto business cards that don’t report on your credit. Some business cards do reflect on your personal credit, so make sure to ask about that before committing to a card. Here is one option you could look into.
  2. Call your current cards and ask them to raise your available limits. The problem isn’t that your balance is high. The real issue is that you’re using too high a percentage of your credit.
  3. Obtain a private loan that does not report on credit to pay off the cards. This raises your score so you can get better funding before paying off the card.

Getting Help to Fix Credit Usage

Interested in discussing a usage loan? Let us know here.

For more info on getting credit ready for leverage, you can watch these videos.

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How to Get Cash From a Credit Card

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Credit Myth: “I can’t get cash from a credit card for my real estate investments.”

We believe every real estate investor benefits from having a business credit card.

But only so many types of expenses can actually be put on credit. What if you need cash to cover a down payment, earnest money, paying certain contractors, and more?

There are lots of expenses in real estat investing that don’t take a credit card. So, how much good is a business card, really?

Fortunately, there’s a simple way to get cash from a credit card.

Getting Cash from a Credit Card

Most credit cards come with an option for a cash advance. But these come with limits that are usually well below what you need for cash purchases in the real estate world.

So how can you pull off getting cash from your credit card even above your credit card’s cash limit?

There’s a service called PlastiQ.

They charge your card and convert it to a wire, ACH, or check. So you can use up your full credit limit to as cash funds.

PlastiQ does charge a fee for this service, but it’s typically lower than your credit card company’s advance fee.

If you want to talk to someone about this service, here is a direct contact for you: Michael Locke, michael.locke@plastiq.com.

(This is not a paid referral – just a service we really think most investors should have in their bag of tricks.)

More on Credit & Investing

Have other questions about using credit cards in real estate investing? Need help setting it up? Reach out to us at The Cash Flow Company. We’re always happy to help.

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Business Credit Card FAQs: Can You Get One with Bad Personal Credit?

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If you have bad personal credit, can you still get a business credit card?

As a real estate, you may be wondering how to get a business credit card and what sort of credit you need.

It can be challenging to secure credit when your personal credit score is less than ideal, but it’s not impossible. In this post, we’ll explore some tips and strategies for getting a business credit card with bad personal credit.

Personal Credit is Key to Business Credit Card Success

First, it’s important to understand that you’ll need a good credit score to get business credit cards. A credit score of at least 700 is usually the minimum requirement, with higher scores providing access to larger limits and more card options.

Assuming you have everything you need to get a business card, including a high credit score, a business or sole proprietorship, and a good, non-real-estate related business name, getting a credit card is relatively straightforward. 

Go to a site like bankrate.com or Credit Karma to pick the card that’s best for you. You can also visit Nav’s list of business cards to compare different types.

If you keep balances, then you may want to look at cards with 0% intro rates. You can change them out every year and save a lot of money.

Business vs Corporate Lines

It’s worth noting that business credit cards and personal lines of credit are different from corporate credit.

Business credit is typically based on your personal credit score and requires you to personally sign on the debt. 

Corporate credit, on the other hand, is based on your Dun and Bradstreet score and does not require you to personally guarantee the debt. Obtaining corporate credit can be a longer process, and it’s not common for small companies to obtain credit at the corporate level.

Resources for Business Setup and Credit Boosting

If you need to set up a business or improve your credit score, reach out to us at The Cash Flow Company. We have ways to help raise your credit score fast, and can guide you in setting up a business.

You can also check out Fund & Grow. Ask us about the discounts they gave us to pass on to you!

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How to Get a Business Credit Card (And Get Better Loans)

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Using a business credit card changes your RE career. Here’s how to get one.

Real estate investors should think of their investment projects as a business. And a huge step in propelling your business forward is to get a business credit card.

A card for your business can solve some major credit-related problems. Here’s what you need to get one.

What You Need to Get a Business Credit Card

There are three main things you need before you can get a good credit card with an easy process. You need good credit, a business, and a generic business name:

  • Good personal credit. The higher your score, the better your options are for card terms.
  • A business. (A sole proprietorship counts). The longer you’ve been in business, the better. But bare minimum, it will need to be a couple months old and have a bank account.
  • A generic name. Additionally, the process will be smoother if the business’s name doesn’t sound like a real estate or lending company.

How to Get One

Do you have the credit, the business, and the right name? If so, then getting a business credit card for real estate is easy.

Go to a site like bankrate.com or Credit Karma to pick the card that’s best for you. You can also visit Nav’s list of business cards to compare different types. Fund & Grow also has some great options you could look into.

If you keep balances, then you may want to look at cards with 0% intro rates. You can change them out every year and save a lot of money.

Once you stop putting your projects’ expenses on your personal card, your credit will be more free for investment opportunities.

Need Help Setting Up a Business Card?

Not sure how to set up a business? Don’t have the right credit to open a card? Reach out to us – we have solutions to fix this quickly.

And lastly, you can also check out Fund & Grow. Ask us about the discounts they gave us to pass on to you!

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Solve Your Credit Problems: Business Credit Cards for Real Estate Investors

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Here’s how business credit cards for real estate investors impact your credit.

You rack up business expenses on your personal credit card for your real estate investing business, and now… Your credit score is too low to get more loans to keep your real estate investing business going.

What’s the answer to this dilemma? Business credit cards for real estate investors.

Personal Credit vs Business Loans

A lower credit score makes it harder to obtain the loans you need in your personal life, such as:

  • Car loans
  • Home loans
  • Student loans
  • Credit cards
  • Boat loans

But your personal credit doesn’t only impact your personal loans. It also impacts the loans you get for your real estate business – which are based on your personal credit score. Whether or not you can get a loan, or how good the terms of the loan is, depend on your credit score.

You need credit cards to keep your real estate projects and business going. What you don’t need, however, is that credit usage driving down your personal score and costing you tens of thousands to hundreds of thousands of extra interest over the years.

What Do Business Credit Cards Do For the Real Estate Investor?

Business credit cards can help solve this problem of usage.

Business credit cards for real estate investors remove your balances from your personal credit, fixing the problem created by the need to use the cards for your projects.

These cards don’t show up on your personal credit, so they don’t drive down your score or get counted against your debt ratios for new loans.

Your business expenses become business debt when put on a business card.

Getting a Business Credit Card as an Investor

Using a business credit card as an investor gives you the benefit of using a card, making accounting easier and not negatively impacting your personal score.

If your investing career is a business, you should be working to obtain a business credit card. Reach out to us to ask how to get started.

And for more credit score tips, check out these videos.

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