Tag Archive for: business credit

Empower Your Business: Business Credit Vs Personal Credit

Alex Erlich, a credit advisor and educator, is joining us today to discuss the ins and outs of what real estate professionals and other companies are struggling with in this current economy.The main focus for today’s conversation is the importance of leveraging business credit vs personal credit. Credit and debt are not equal in any shape or form, but we have to play the game to win it. Knowing the rules of how to play will get you in the best position to win! Whether it’s the credit card game, credit game, or the leverage game, you need to create a leverage profile. Let’s take a closer look to discover what you need to not only establish your company, but ways that can set you up for success.

How to leverage business credit instead of personal credit?

So many people are putting business expenses on their personal credit. Unfortunately that is not as efficient as one might assume. 70-80% of clients are overextended on projects, and have maxed out their credit cards. Thus making it extremely difficult to be approved for additional loans moving forward without further impacting personal credit scores. In order to prevent this landslide, we need to approach business expenses more professionally and keep everything business focused. In doing so, it will prevent further strain on your personal credit, increase eligibility, and create more leverage. What exactly do we mean by leverage? Leverage is how much you are eligible for and what it looks like on paper. Leverage is the King in real estate. Having more leverage allows for more opportunities, not only your business, but for your personal life as well.  

How do we turn the focus from personal to business? 

First and foremost individuals need to acknowledge that they have a business. Surprisingly, many business owners don’t consider themselves to be entrepreneurs. From relators, to contractors, and everyone in between, they typically consider themselves to be employees of the overwriting company. However, this mindset needs to change! They should not only view themselves as entrepreneurs, but also a representation of the brand. Another component that should be evaluated are items on your personal credit that need to be removed. This will in turn prevent you from personal liability as you continue to grow your business.

What is another problem that business owners have to navigate?

The quick and simple answer to this question is social media. The majority of info is on TicTock, Twitter, and even on reals. Even though not all of it is bad information, it’s not always complete information. It is imperative that any information found on social media should be researched further. In regards to credit score expectations, there is a lot of misinformation on the internet as well. Do your research and always seek out support from professionals if you have questions.

Where do you go for correct credit score information?

 MyFico.com is the best place to get not only basic credit score information, but specific scores that can impact you differently depending on what you are needing them for. It can be information overload with 40 scores available, however, by going straight to the source it provides you a cost free and spam free way to gather all of the information you would need to make a financial decision. Ideally you should have a personal credit score of 680 to 720 in order to qualify for various lending options. Ultimately it is better to be at a 720, but how do you get there? Here are the top 4 things you can do to make your personal credit score improve quickly.


Do not open new credit unless you have talked with a professional and they have created a step by step outline. At The Cash Flow Company we can help you apply for a 911 loan instead to take care of the one or two items that are holding you back financially.


Remove any derogatory information that is on your credit report. Now is the time to see what can be done about it and how to leverage it. Especially if it’s a local bank. Something from three to five years ago that already has a zero balance, should be removed. Be methodical and purposeful.


Take into account your inquiries. If you have been shopping for money and applying for things, look into a fast inquiry removal. This can make a substantial positive impact on your credit score. If you are using your personal credit to inquire about your business, those should all be disputed as well. 

Fourth and final:

Relationships are your key to a successful business. Determine which companies are having the hardest time or tightening their budget. These are the ones that will leave you behind so they can swim upstream in search of bigger and better clients. By building local, human, real relationships, the more successful you will be.

Personal Relationships

In working with real estate investors, realtors, and contractors, a lot of what we enjoy doing is working human to human. In forming that connection with our clients, we are able to focus on how we can make them better both as a person and as a company. They are all unique and don’t all need the same things. For one client they may need a little rearranging to raise their credit score, while others could require a longer process to get back on the right path.  By forming personal relationships with local banks, you are more likely to be approved for lines of credit, credit cards, or loans that can in turn grow your company. Another benefit to going local is that regional banks or smaller banks, don’t have the same guidelines as the big banks. They can do “make sense deals” when they make sense. 

Getting started is daunting! Here is what you need to get in it to win it.

  1. Make sure personal credit is setting you up for success. Identify and separate business credit vs personal credit to get your credit score back on track. 
  2. You need to decide what the business is and it’s subcategorization. Banks will look at the NAICS to determine what industry you are in, as well as the subcategorization when you are applying for business funding.
  3. How do you select a name for your  business? Will there be a parent company? 
  4. Establishing the company properly through the secretary of state, applying for an EIN, applying for a business license, and opening business accounts for expenses. Setting this up correctly will ensure that you are seen as a business not only to lenders, but to clients as well. 
  5. Be very clear with your goals! Where do you want to go with your business, how many properties do you need, do you need to buy machinery? All of these goals need to be established first and foremost when starting your business. 

In conclusion, it is important that you are establishing your business correctly from day one and forming positive relationships that will set your business up to win. The faster you can separate your business vs personal credit, the better your personal credit score will be, and will in turn create more leverage for future growth. All the little tricks will get you there! We can help guide you through this process! 

Contact us today to find out more about setting yourself up for success.

Need more tips and tricks? Watch the full interview with Alex Erlich

Credit scores and loans

Leverage/loans are the key to building a successful real estate business.  Credit scores are becoming more and more of a factor on who is approved for loans and or denied.

All serious investors must understand how to win at the lending game. A large part of that is understanding and managing your credit score.

Better scores equal better loans.  Better loans help create wealth and income faster.


How Your Credit Score Impacts Loan Approval

Lenders use your credit score when deciding if and how they offer you credit, such as mortgage, car loan or a credit card. Your score also affects terms and rates associated with these loans.

Your payment history is the cornerstone of your credit score, but other elements also play a part. These could include:

Your credit score is a number.

Lenders use your credit score to assess your risk as a borrower, using data reported to credit bureaus such as Equifax(r), Experian(r), and TransUnion(r).

Your credit score can have an immense impact on your life. It can determine whether a lender approves of an application for a mortgage.

Your credit score takes into account how you’ve paid past bills and the debt that’s currently outstanding, along with your mix of accounts (credit cards, retail accounts, installment loans (car or student loans) and finance company accounts). Lenders also look at how long it has been used; generally speaking it should remain under 30%.

Your credit score is a factor.

Many individuals don’t realize how important their credit score is in loan approval decisions. Lenders use it to assess whether someone should qualify for mortgage, business loans as well as determine interest rates that borrowers will pay on these loans.

One of the key factors affecting one’s credit score includes length of history, debt-to-credit ratio, payment history and types of accounts held. An equally significant element is how long since any negative event such as missed payments or bankruptcy occurred. Either can have an enormously detrimental effect on one’s score.

Lenders prefer to see a mix of retail, finance company and installment loans in your credit profile. Too many new accounts may raise red flags.

Your credit score is a red flag.

Lenders use credit scores to gauge whether or not someone will repay what they borrow. A higher score demonstrates responsible financial behavior.  Higher scores will help qualify an applicant for better terms on loans.

Your credit score is determined by many factors, including payment history, amounts owed, length of credit history, new accounts opened and mix. One keyway you can improve your score is paying debts on time: this component accounts for 35% of FICO scores and 30% of VantageScores.

Excessive new account activity can also lower a credit score. This factor is measured by the total number of hard inquiries on your report; these could include applications for new credit as well as inquiries made by lenders to pre-qualify you for loans or credit cards.

Your credit score is a good thing.

Your credit score demonstrates your reliability as a borrower and determines the likelihood that a lender will approve of you for a loan. Furthermore, it affects interest rates you will pay, potentially saving thousands over the course of your loan’s lifespan.

FICO or VantageScore scores are calculated based on information found in your credit reports. This information comes from the three major bureaus, which contain payment history, utilization rates and age information of accounts.

Setting and making regular on-time payments are two effective strategies for increasing your scores, along with keeping revolving balances to an absolute minimum. Lenders tend to prefer when their borrowers use no more than 30 percent of available revolving credit available.  Having multiple types of loans like mortgages, auto loans, and credit cards may also boost your score. Keep in mind that your score may change with new information appearing in your report over time.


Need a loan to increase your score in less than 30 days?  Credit score usage loan.

How Your Credit Score Impacts Loan Approval. Credit usage loan.

Credit scores and loans


Utilization Rate Affects Your Credit Score

When you apply for a loan, the lender will look at your credit report to assess your creditworthiness. One key metric lenders use is your revolving debt utilization rate, or the percentage of your available credit you’re using. A high revolving utilization ratio can make it harder to get approved for loans. Knowing how your revolving utilization rate impacts your credit score and taking preventative steps to keep it low can help you improve your chances of getting the loan approval you want.

What is a revolving debt utilization rate?

A revolving debt utilization rate is the amount of debt you currently owe on revolving credit accounts (such as credit cards) divided by your total credit limit on those accounts. It’s calculated by adding up the outstanding balances of your revolving credit, like credit cards and home equity lines of credit, and then subtracting the respective credit limits from those totals to find the debt-to-credit ratio. You can calculate this ratio by tallying up the outstanding balances on all your revolving credit and then dividing the result by the respective credit limit to find your utilization percentage.

Your credit utilization rate is used to predict your credit risk and has a significant impact on your FICO credit scores, making it the second-most important factor behind only your payment history in the scoring model. The higher your revolving utilization, the more likely you are to have difficulty repaying what you borrow. For example, if you have a credit card with a balance of $2,000 and a credit limit of $10,000, your utilization rate is 20%.

However, it’s important to remember that revolving debt utilization rates only include revolving credit accounts such as credit cards and home equity lines of credit; they don’t consider other types of debt, like installment loans, which have a set repayment schedule. For this reason, credit card balances tend to have a greater impact on your credit scores than mortgage and auto loans, which are reported as installment debt.

What is a good revolving debt utilization rate?

Lenders typically prefer to see that borrowers aren’t using more than 30% of their revolving credit limit. Carrying too much debt could indicate you’re having trouble repaying what you’ve borrowed or may be struggling financially.

In addition, many lenders have their own guidelines for what is considered a “good” revolving debt utilization rate. Some lenders will decline applications for credit or will only approve applicants with revolving debt utilization rates below certain thresholds.

Keeping your revolving credit utilization low is a great way to improve your credit score, and it can also save you money on interest payments. To lower your utilization rate, make sure you pay off your credit card balances each month, and try to keep your balances as low as possible. If you have trouble paying off your balances each month, call your credit card company to see if they can give you more time to pay your bill or set up automatic payments.


Find out how a loan can raise your score in 30 days or less


Utilization Rate Affects Your Credit Score.

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