Follow up to Part 1; we’re discussing The Truth about Credit Card Financing. The reality is that there is a right way and a wrong way to use credit card financing for small business. Used the right way, credit card financing can help small businesses grow their companies, hire more employees and contribute to the nation’s economy and achieve their business goals and dreams.
Small business owners shouldn’t fear credit card financing, but it’s important that they–and all those who advise them–understand how to use credit cards the right way to grow their businesses. Here are 4 steps to using credit card financing the right way.
Use the right kind of business credit cards – Keeping your business and personal credit separate is important to maintaining your personal credit rating and building your business’s credit rating. Using business credit cards that report to your personal credit profile puts your personal credit score at risk.
Keep credit utilization within acceptable levels– one of the primary reasons small business owners don’t reach their full credit potential is excessive credit utilization. Most small business owners don’t realize that 30% of their FICO score is determined by their utilization percentage.Excessive utilization has several negative effects. It can keep you from getting financing altogether.
Maintain plenty of available credit– To protect yourself and your business, and to expand your options for obtaining financing, you should always strive to have at least $100,000 in available credit. The nation’s #1 expert on FICO scores and credit profiles, John Ulzheimer, calls this credit insurance.
Treat your credit as an asset– If you have poor credit, work to improve it and turn it from a liability into an asset. Once you have attained good credit, treat it like the valuable asset that it is, and work diligently to maintain it.
This concludes the series The Truth about Credit Card Financing, to better understand how to properly obtain a Small Business Loan or Unsecured Business Lines of Credit talk with a small business resource specialist at 1.888.783.1503 or click here. If you would like to read The Truth about Credit Card Financing click here.
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