What are the Benefits of Using Business Credit?
If you’ve seen some of my interviews or have been reading some of these blogs, you know that I highly recommend getting to the point where you can use business credit.
Having business credit is so impactful and it can do everything from helping you start a business, fund a business, or even start a business investment.
Here, I’m going to go over 4 of the best benefits of using business credit.
4 Benefits of Using Business Credit
I’ve previously discussed why you want to have good overall personal credit because this opens the door to getting access to business credit.
So why utilize business credit?
1. Business credit is not reported on personal FICO credit score
The number one benefit to using business credit is that it doesn’t report to your personal FICO score.
What that means is that when you have a business account opened, that account will not show up any type of personal credit report. So this won’t affect:
The age of your personal account, so if your business account is only a few months old, that won’t report to the personal side.
Your utilization on your business account won’t be reported to your personal, which can affect your credit score
Another great benefit to this is that you can remove any hard inquiries on open accounts. This is not possible on a personal account.
2. You get approved for higher limits
Business credit cards can get approved for 2x the average personal credit card limits.
That’s right – 2x!
So let’s say your average limit on a personal credit card is about $20,000, you would see between $40 and $60,000 on a business credit card.
Again, this is why it’s so important to ensure that you have good credit on the personal side.
You can also borrow at 0%, if you’ve got that very good personal credit.
3. There’s no risk to investing with credit
When you use business credit to invest, you can borrow money to help start a business or invest.
Now, should that business or investment fail, you can transfer that balance to another bank’s card.
For example, let’s say you borrowed $20,000 at Chase bank; if that investment doesn’t work out, you can transfer that amount to a local bank, like KeyWest.
If you’re still unable to pay that balance, you can again transfer the amount over to a credit union.
In the end, this can give up to 5 years to pay off that debt.
But what happens if you still can’t pay and it ends up in collections?
You can still go through the credit repair process and have it removed should it reach that point.
4. You do not need a business to take advantage of business credit
Lastly, guys, there’s the misconception that you need to have a business in order to take advantage of business credit.
When you apply for business credit, you’ll be asked to give your EIN, which is your employee ID number. This is usually what you’ll need if you’re an LLC.
However, if you’re a sole proprietor, you only need to enter in your social security number.
This allows you to access a business credit line, which – as mentioned above – you can use to start or fund a business or even invest.
And the great part is, you aren’t using your own money; this is where OPM – or other people’s money – comes into play.
In this case, it’s the bank’s money.
The minimum payment for paying off your business credit is only 1%, which is incredible.
Keep in mind that business loans will have a much higher monthly payment, as well as interest, which business credit does not.
There’s also the ability to use purchase protection, such as on certain products or services, and the ability to charge back.
You also get better points and cash back rewards, which can’t be said for either personal credit loans or business loans.
And that’s it, the 4 benefits to using business credit.
If you’re interested in applying for business credit, then check out some of my recommendations for cards.
And don’t forget to check out the Credit Stacking community, so you can leverage business credit and begin to live a life of financial freedom.