3 types of credit – and why business vs personal cards are the right option for real estate investors.
Your credit score is the driving force behind your financing. 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. But let’s compare it to two other major forms of credit.
Business and 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. However, 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.
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