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(Transcribed by TurboScribe.ai - Go Unlimited to remove this message) Welcome back to the Business Credit and Financing

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Show. This is a previously recorded webinar that was

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streamed across our Credit Suite social media pages.

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These webinars happen twice a week and give

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you an opportunity to engage in an interactive

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setting with other entrepreneurs and business owners as

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we dive into each financial topic. We're excited you're here today for the audio

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recording and looking forward to seeing you in

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the next one. Welcome to the Business Credit and Financing Show.

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Each week, we talk about the growth strategies

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that matter most to entrepreneurs. Listen in as we discuss the secrets to

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getting credit and money to start and grow

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your business and enjoy as we talk with

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seasoned business owners, coaches, and industry leaders on

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a variety of topics from advertising and marketing

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to the nuts and bolts of running a

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highly successful business. And now, to introduce the host of our

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show, financial expert and award-winning author, Ty

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Crandall. Card approvals.

1:01

Look, if you want more business credit cards, then you should really understand what lenders, or

1:05

I should say credit issuers, are really looking for.

1:07

Just by understanding the basics here, you're going

1:10

to be able to turn a lot of what would be denials into approvals.

1:13

So if you've been denied for business credit cards before, here's why.

1:17

I'm going to decode it right now and tell you exactly why you're getting denied for

1:21

these business credit cards, the secret things that

1:23

lenders and credit issuers are really looking for.

1:26

And then we're going to talk about the things that you should be doing, the things

1:30

you should be doing to positively affect these

1:32

factors so you can get approved. Look, it's all about getting approved, and that's

1:36

exactly what we're going to dive into right

1:39

now, is how you stop getting denied and

1:41

how you get approved just by understanding the

1:43

factors that tie in to your business credit

1:46

card approval. So we've got a lot to cover, so

1:49

let's dive in and let's get going. Okay, so when we talk about business credit

1:52

card approvals, a lot of these are done by an automated system, right?

1:55

So what's happening is we've got computers evaluating

1:58

certain factors and determining what we should get

2:01

approved, which should we get approved, and how much should we get approved for.

2:04

Here's the factors that they're actually looking for

2:07

in those computers. Now beyond that, there also may be push

2:10

for manual underwriting. So I'm going to be bringing some things

2:13

in here that might affect you on credit lines and loans, not as much business credit

2:18

cards. And we're talking about a lot of things that will affect you on business credit cards,

2:21

loans, and lines. So just by this training and this training

2:25

alone, you're going to walk away with a good understanding of the factors that will get

2:27

you denied and the things that will get you approved as well.

2:30

If you're just coming in, tell me where you're coming in from. Like Moody is saying, hey boss, thanks for

2:34

coming in from Facebook, I appreciate it. Okay, so first of all, it's obvious, somewhat,

2:39

somewhat not, and it is the credit score.

2:41

So when we look at business credit cards,

2:44

business credit cards are way harder to get

2:47

approved for than consumer credit cards. Your credit scores need to be way higher

2:50

for true business credit cards that don't report

2:54

to a consumer credit reporting agency, unless you're

2:57

building corporate credit. We can build a business credit profile and

3:01

score, or we can use that to fund our business where we can get credit cards

3:04

without a personal credit check. But either way, credit matters.

3:08

So let's look at both sides of this coin, consumer credit.

3:11

So there are plenty of credit cards out there you can get that are not based

3:15

on you having good credit. But a lot of them will report on

3:18

the consumer credit reports. So Capital One Spark Card is an example,

3:23

right? Capital One Spark Card, for example, reports on

3:26

the consumer and business credit reports. Not what you want, because as you put

3:30

a balance on that credit card, it hurts your consumer score.

3:33

We want to stay away from that. But most business credit cards out there, Chase

3:36

Bank, Barclays Bank, et cetera, lots of them,

3:39

they're going to really rely on you having

3:41

better credit, about a 680, 700 type credit

3:45

scores. Now, I'm going to pull up an alternative

3:47

option. I'll pull up some secure credit cards and

3:50

some other ones that work for you, even if you have subprime credits as well.

3:55

And I will pull that up right now for you. Excuse me, I probably should have had that

3:58

pulled up. So there are options out there if you

4:00

don't have good credit, but a lot of them do rely on you having good personal

4:05

credit. So here, let's take a look at this

4:07

right now. I'm going to show you some alternative options.

4:10

So let's look at this. So if we look at some of these

4:14

other options, we see that with these credit

4:16

cards that are based on personal credit scores,

4:19

not business credit scores, there's a lot of different options here we have.

4:22

So this is more of the subprime category.

4:25

And what I mean by that is even then, you need about a 660 credit score

4:29

to get approved for a lot of these sources.

4:32

Now, a lot of them, like Brex doesn't have one, and Ramp, and there's a prepaid

4:37

Visa card here through PEX, then this is

4:39

based on revenue with bad credit. So there are some options here.

4:43

But for the most part, if you're looking for really good business credit cards that don't

4:47

require a, or that do need a personal

4:49

guarantee, do need a personal credit check based

4:52

on personal credit, 660 is about the lowest

4:55

score you're going to see on a lot of these. And there's a lot of these out there,

4:58

by the way, these are some of the best ones, US Bank, the American Express, Blue

5:02

Business Credit Card, Southwest, Hilton Honors.

5:04

So there's a lot of good ones out here, you might want to take a snapshot

5:07

of some of this. And you can see that almost all of

5:09

them are 670 plus credit scores that you

5:11

can get approved. Then we look at Subprime, right? Here's how crazy it is.

5:14

The Subprime, we're still at 660 with almost

5:17

all of them. Besides like some of these alternative ones like

5:19

Brex, Ramp, these are like alternatives that you

5:23

can consider. This is a prepaid through PEX, and then

5:27

Revenued is just based on you having revenue,

5:30

but you're able to get approved even if you have bad personal credit, right?

5:34

So that being said, that kind of gives you a look at some of the credit

5:37

score requirements for some of these sources in

5:39

the business world. Now, of course, there's a whole other world

5:42

where we can get credit cards based on business credit quality, right?

5:45

So we can build a business credit profile

5:47

and score. We could use that business credit profile and

5:50

score to get approved for financing as well. Yvonne, thanks for coming in from Queens, New

5:54

York. And Melissa, thank you very much for coming

5:57

in and giving me a hand wave. I say hello to everybody.

5:59

Give me your company names. I'll give you a shout out right here

6:02

on the live stream, which is pretty cool. It's like free press here from Credit Suite

6:06

to promote you. So first of all is credit score, right?

6:08

We're going to look at credit profiles. We're going to look at credit scores when

6:11

it comes to credit cards. The question becomes what type of credit card

6:13

are you applying for? If you're applying for one that's going to

6:16

look at your personal credit, then we know 660 plus credit scores for most of those

6:20

business cards. And we've also looked at some alternatives that

6:23

are prepaid card that could work for you as well. Now, the other side of the coin is

6:27

building business credit and using your business credit

6:30

quality to be able to get credit cards as well.

6:32

And this is where we start building business

6:34

credit with Uline, Granger, those kind of vendors.

6:37

And then that reports to the business credit reporting agencies.

6:40

Then we start to get retail credit like Staples and Best Buy and Apple and that

6:44

kind of stuff. Then we get fuel cards, then we get

6:46

Visa cards and MasterCard. This credit, we don't need a personal guarantee.

6:50

We don't need a personal credit check, but they're going to look at personal credit quality,

6:54

right? So what we need to be working on as business owners is improving both our personal

6:58

and our business credit quality. Now, luckily or not, maybe not luckily, but

7:03

the nice thing is, is that business credit is a little easier to be able to

7:06

fix and get good than personal credit.

7:08

So if you've got personal credit, you should be working on fixing it.

7:11

Like work with a reputable credit repair firm that can help you there, but still be

7:14

building business credit because that can compensate for

7:17

the damaged personal credit. Meaning that you've got two ways to get

7:20

credit cards here. You could do it based on personal credit

7:22

or you could do it based on business credit, or you could really do it based

7:25

on both. My daughter would choose that option.

7:27

She's always the give me both option. So there's really three ways.

7:30

So you need to be working on improving consumer credit and building business credit because that

7:34

opens up max funding for you. They're going to look at your credit profiles.

7:38

They're going to look at your credit scores and the quality of your credit profile and

7:42

score will ultimately determine if you get approved

7:44

or denied. Now, I like to personally ask a source,

7:47

where do you report to and which credit do you pull for the approval?

7:50

I don't know. I do it before I apply for anything. So a month or two ago, I applied

7:54

for a PNC bank card and credit caught up. I said, where do you report the credit?

7:57

They said like to this consumer credit reporting

8:00

agency and this business credit reporting agency.

8:02

So I knew right away I wasn't interested because I didn't want a credit card that

8:05

reports on my consumer credit. But then they interestingly enough said, hey, and

8:08

by the way, we pull Experian personal credit

8:11

to make the approval decision. Now, in this case, it was a credit

8:14

card that required a personal guarantee, but whenever

8:16

I get applications, I like to ask them, I call them and say, hey, where do

8:19

you report to? Who do you pull to make your decisions?

8:22

So it's good practice for you to do so.

8:24

And remember, I'm working on building the business

8:27

credit, improving personal credit that opens up multiple

8:29

different ways to be able to fund your business. And Loretta's coming in from Georgia.

8:34

Thank you very much for coming in. Shandy with Dream 12 Properties.

8:37

I absolutely love that. And Yvonne says, business name is African Holistic

8:42

Health, chapter of New York. I love that.

8:45

And Loretta says from Denaro Investment Partners.

8:47

So I love that as well. Yvonne says, my Sam's Club went into collections,

8:51

but I'm paying it off. Please forgive me. Credits will help me get my business credit

8:54

cards, but I went over order board. I'm rebuilding my business credit.

8:57

That's good, Yvonne. Look, that's a great point.

8:59

And I love Yvonne just being transparent and

9:02

open. It helps our community be able to get

9:04

better results. It's okay if you have damaged business credit,

9:07

let me tell you the best way to fix it. Build more positive credit.

9:10

It's simple. So what you really want to always do

9:13

is you always want to never stop building

9:15

business credit because as you get more positive

9:17

accounts, your negative account has less of an

9:20

impact, right? So if we look at the Paydex score,

9:22

for example, the business credit score, the main one of the business world, it's based on

9:26

an average of how you pay your bills.

9:28

So if we have 10 accounts and nine are paid perfectly and one's bad, we still

9:32

have a good score because our good outweighs

9:35

our bad. So I always tell people, get as many

9:37

business credit accounts as you can responsibly manage

9:39

and use, right? Because the positive offsets that negative.

9:43

When you do have something, inevitably it happens.

9:45

Things always happen. Then the positives can outweigh the negative.

9:48

And by the way, Yvonne, you should be disputing that negative item wherever reports DMV, Equifax

9:53

and or experience. Hopefully that helps you there. So the next thing is business revenue and

9:57

financial health. This is an interesting one, right?

9:59

So what lenders or what credit issuers are

10:02

looking for, first of all, is your revenue, but with credit cards, it's no, no doc.

10:06

They're not verifying. They're asking what your revenue is.

10:09

And sometimes they ask like what your projected

10:12

revenue is. Now I'm not telling you to go commit

10:14

fraud because they don't verify it.

10:17

And be honest and truthful because that can come back.

10:20

We've seen recent court cases where people get in trouble for embellishing the value or allegedly

10:24

embellishing values of certain things, right?

10:27

So you've got to be really careful. You don't want to inflate the value of

10:30

what you actually are making, but they're not

10:33

going to make you prove it. It's no doc. So with credit cards, they're going to want

10:37

you to say, Hey, they're going to say, how much is your revenue? How much is your projected revenue?

10:40

But with credit lines and loans, they're going

10:42

to make you verify. So know that difference, but they're going to

10:45

want to know what's your revenue. The next thing is what is your financial

10:48

health? Now, this is an interesting one because in

10:50

the business world, they'll pull other credit scores

10:54

other than like your main paydex score with

10:56

Dun & Bradstreet and almost all of the

10:59

other credit scores they look at the Dun

11:02

& Bradstreet rating, for example, the payment, the

11:05

actual pay failed score, right? So we've got a lot of scores are

11:08

just based on your business actually failing itself,

11:11

right? We call them failure scores. These scores take into account the financial health

11:15

of your company. Here's where it's interesting. You can submit your tax returns to the

11:19

business credit reporting agencies, and if they're good

11:21

and they have them, they'll give you a higher score in these areas.

11:25

Now, if your financials are bad and you're losing a bunch of money, don't send them

11:28

in there. That's not going to help you. But here's what else is interesting is that

11:31

if they don't have those financials, they'll look

11:34

at the number of your employees to determine

11:38

your financial health, meaning the more employees you

11:40

have, the bigger your organization is, the more

11:43

financially stable they predict that you are.

11:46

The smaller your business is, the less financially

11:48

stable you are. So that means that if you file annual

11:51

reports and you say you have two employees and you don't submit tax returns to Dun

11:55

& Bradstreet, these other scores could be lower

11:58

because you don't have a lot of employees

12:00

and they don't have your financials. Now, the way around that is as you

12:03

get bigger and have more employees, that'll help fix that.

12:06

And if they have your financials that are good, that'll fix that.

12:08

But in the interim, just keep in mind that can happen. How do you compensate for that?

12:11

Get a lot of accounts on the business credit reports and pay them as agreed.

12:15

That will help increase that aspect of the

12:18

score that'll offset the part that your financial

12:21

health might not be good. But keep in mind, they're going to look

12:23

at your personal credit reports or business credit reports, sometimes both.

12:26

And then they're also going to want to know what your revenue is on credit cards

12:29

and not prove it. Credit lines and loans, they will make you

12:32

prove it. And the other thing to keep in mind is that they're going to look at the

12:35

financial health of your business. And now, you know, it's based on tax

12:38

returns or financial data they have. And the second thing is the number of

12:41

employees you have. So some interesting things there as well.

12:44

Chucky21, what would be a good first business

12:46

credit card to obtain? Ty, greetings brother from California.

12:49

Thanks for coming in. Well, there's a lot of variables there.

12:52

So to answer your question, Chucky, it really depends on what you're looking for.

12:55

Do you want a credit card that reports only on the business credit reports?

12:58

Or do you want one that only reports in the consumer credit reports?

13:01

And the next question is, do you want to provide a personal guarantee or not provide

13:05

a personal guarantee? And the other thing is, what's your personal

13:08

credit quality? So there's a lot of variables in there

13:10

to determine what you would start with in

13:13

the business world. I'm really big on Amex.

13:16

I think Amex has some of the best business credit cards out there to start.

13:19

But again, you need to have good credit in order to get that.

13:22

If you don't have good credit, then you

13:24

want to start building business credit and start using business credit to get credit cards there.

13:29

So hopefully, Chucky, that provides some good feedback

13:31

for you. Bertha, hey, thanks for coming in and DDTV,

13:35

thanks for coming in. I appreciate you saying hello.

13:37

Okay, so personal credit is a factor they

13:39

look at. Business credit is a factor they look at. Sometimes they look at both.

13:42

Sometimes they look at one or the other. It all depends on which credit card you're

13:45

applying for. Good to ask, right? Then we talk about business revenue.

13:49

They're not going to prove it. They're going to ask it. So you should know that.

13:51

The second thing is financial health. We talked about number of employees and financials

13:55

they have that they use to determine that. The next is industry risk.

13:58

I talk about this. I'm one of the only people that does, and it's super, super, super important.

14:02

Because this all comes down to something called your NIACS code, and you can do this

14:06

right now. Go to NAICS.com.

14:10

And if you go to NAICS.com, you're

14:12

going to find a lot of different industries

14:14

that you can actually use to determine what

14:17

industry your business is actually in.

14:19

Here, I'll give you an example. Let me show this to you right now.

14:23

Let me show you what I'm talking about here. If we come here, if we look at

14:27

this, we're going to go to NAICS.com

14:29

and we're going to find out what our industry code is.

14:32

And I'm going to show you also why this is important.

14:34

NAICS.com is 100% free search, and

14:37

it allows us to get an idea of whatever it is that we do.

14:40

And then we're able to really start narrowing down what our NIACS code may be.

14:46

So when you apply for any kind of

14:48

credit financing, open a bank account, you should

14:50

always be putting this exact language as what

14:53

your industry is. And then you should also be putting this

14:56

code. So when you apply, for example, let's just

14:58

say you're a software company, let's say you're

15:01

a software company. And here's why it's important to know this.

15:04

And now a quick break to hear from our sponsor.

15:07

Hey, it's Ty Crandall with Credit Suite. Many of our subscribers want to build business

15:11

credit that's linked to their EIN without a

15:13

personal guarantee or credit check. Now if you're looking to get no doc

15:16

high limit business credit cards that report to

15:19

the business reporting agencies without a personal guarantee

15:21

or credit check, give us a call at 877-600-2487.

15:26

That's 877-600-2487.

15:29

Or schedule your free consultation online to talk

15:32

more at CreditSuite.com forward slash consult.

15:35

You can see I look at software, look at how many different subcategories of software there

15:39

are. There's what, four, six, ten.

15:42

So you may say you're a software company,

15:44

but this is why this is important to know because there's 10 different subcategories of software.

15:50

So what of these are you? You have to find out which one is

15:53

more of descriptor of what you do.

15:56

Now let's say you're a software publisher. So whenever I apply for credit or financing

16:01

or open a bank account and they say, what industry are you in?

16:04

I would literally say software publisher, a parenthesis,

16:09

NAICS code 513210, end parenthesis.

16:13

That's how I apply for everything. And what you're doing there is you're forcing

16:16

the credit issuer or lender, you're forcing them

16:19

to use your actual NIACS code.

16:22

Now before we want to do that, we want to come here, we want to do

16:24

high risk NAICS code.

16:27

We want to do a simple Google search here.

16:30

And we're going to look at two things. We're going to, first of all, look at

16:32

NIACS, we're going to look at NIACS own list to make sure software is not on

16:36

there. We're going to check all these to make sure they're, they're not high risk, right?

16:40

And then if they're not on there, then we're also going to want to check out

16:43

credit suites blog, which is the second result you'll see.

16:46

And then this will say, Hey, here's other high risk NAICS codes, right?

16:50

And so we're also going to take a look here and we're just going to make

16:53

sure that other high risk NAICS codes are

16:56

not here. And if they're not here on either one

16:59

of these lists, then we know that we're

17:02

okay. We say, okay, we're not, it's not here.

17:04

This is our industry. Now, a lot of people say to me,

17:07

what happens once you know that info, who

17:09

do you tell? Well, first of all, go to your accountant

17:11

and update your tax returns, future and backwards

17:14

to make sure that the IRS knows what

17:17

industry you're in. Here's why that's important. I'm not an accountant.

17:19

This is not accounting advice, but that's how

17:22

the IRS determines who gets audited. What they do is they look at your

17:25

expenses and they look at others in your

17:29

same industry and they make sure that like

17:32

it's in line. If your expenses are way out of line

17:35

with others in your industry, it throws up

17:37

red flags and that's what triggers audits.

17:39

Here's the problem. If you don't know which of these 10

17:42

NAICS codes you're in software, then you're oftentimes

17:46

put the wrong category. Then your expenses are looked at against others

17:50

that aren't even in the same industry as you. Then it throws up red flags.

17:54

Then it triggers unnecessary audits amongst many, many,

17:57

many other problems. The other problem here is that the bureaus

18:00

really, really do not like high-risk industries.

18:03

So they will absolutely crush your credit scores

18:06

if they think that you're in one of these high-risk industries.

18:09

So now you know, like how do we find it for what a high-risk industry

18:12

is? How do we choose our NAICS code? How do we then go forward and make

18:16

sure they're always putting us in a low -risk industry?

18:18

Now you know how to do that. Also, when you pull your business credit reports,

18:23

the bureaus will tell you what industry they

18:25

have you in, what your NAICS code is. If that's wrong, challenge it with the actual

18:30

bureaus themselves. Dispute that so then they actually know that

18:34

you're not in the industry that they think that you're in.

18:36

By the way, usually they'll easily fix that.

18:39

Sometimes they won't. Sometimes they give you some slack. I've done that.

18:41

Experience. I wrote them and they said, ah, you know, we verified this through a third party.

18:46

I wrote it back and I said, I know who your third party is.

18:48

It's LexisNexis. Here's my LexisNexis report.

18:51

It's right. Here's Equifax. It's right.

18:53

Here's DMV. It's right. Here's my tax returns.

18:56

It's right. And here's yours. It's wrong.

18:59

So why are we going through this? You have it wrong.

19:01

Everybody else has it right. Fix it. And guess what?

19:04

The next time they came back and said, we fixed it. So you absolutely can fix it.

19:07

Usually with little hassle, but some things to

19:09

keep in mind if you are running into

19:12

some issues there. And then Macio says, hey, Macio from San

19:15

Francisco, fundable business and credit solutions.

19:17

I absolutely love that. Sean, he says, do credit card companies, recheck

19:20

your personal credit periodically when you have one

19:23

of the credit cards and reduce your credit limit.

19:25

I love that question. So it's not as much about periodic credit

19:29

checks. It's a matter of them getting notified when

19:33

things change on your credit reports.

19:36

So if you go to get your business credit reports right now from Dun & Bradstreet,

19:40

then what will happen is Dun & Bradstreet

19:42

will then even give you an option if you get credit monitoring from them.

19:46

And I'm using them as an example. They're all the same of getting an alert

19:49

when something changes, right? You may have that. I have that on my consumer credit.

19:52

When something changes, I get an alert through my email, right?

19:56

Well, those alerts, lenders and credit insurers also

19:58

get. So when there's new inquiries or when your

20:01

credit score really drops or when your available

20:04

credit gets to be too high, those things

20:07

are what trigger all kinds of things around

20:09

us. It's what triggers Lending Club to send us

20:12

letters and credit card debt consolidation people.

20:15

These things are all happening because they're getting

20:18

access to triggers that are notifying them that

20:21

things change. So it's less about periodic checks.

20:24

It's more about they're getting notices when things

20:27

are changing on your credit reports. And when there's adverse changes, that is when

20:32

they will come in and oftentimes reduce your

20:35

limits to what you owe. Here's a personal example.

20:38

So I defaulted on business debts back in

20:40

2006 when the mortgage crisis occurred.

20:42

I owned a mortgage company at the time. Those reported as collections on my personal credit

20:46

report. The minute that happened and my credit scores

20:49

lowered to a threshold that notified my credit

20:52

issuers, all of my credit issuers lowered my

20:55

limits to what I owed. So how did that happen?

20:58

They weren't doing a periodic check.

21:00

What they were doing was they were getting notices that my score had below a threshold

21:05

that was acceptable to them. And then sometimes it's a utilization ratio that's

21:09

below. So those are the kinds of things that will trigger that fantastic question, Shandi.

21:14

And that is exactly how that system actually

21:16

works. And Loretta says, hey, if you have a

21:19

high risk business, what will be the best

21:21

credit card to get if you don't want to use your personal credit?

21:24

Well, any of them will work. What I like about business credit cards without

21:28

a personal guarantee and credit check is they're

21:30

super forgiving of industry.

21:33

Super forgiving. Now, when they look at your personal credit

21:35

and they do have a guarantee and credit check, not as forgiving, but somewhat forgiving.

21:40

I'll tell you who's not forgiving are loans

21:42

and credit line lenders. So if you're trying to get a loan

21:45

or a credit line, your industry is a really big problem if it's high risk.

21:48

If you're trying to get a business credit card that requires a personal credit check, it's

21:52

okay. It's something they care about, but not really,

21:54

really care about as much as lenders issuing loans and credit lines.

21:57

And then the last category there is you're

22:00

building business credit without a personal guarantee and

22:02

credit check, real corporate credit, and that industry

22:05

rarely matters. So hopefully that answers your question there, Loretta.

22:08

Okay. So industry risk is another one of those

22:11

factors that they look at. Now outstanding debt and liabilities is another one.

22:16

Basically whether they're looking at your personal or

22:19

your business credit, do you have a lot of outstanding debt?

22:22

How are you paying that? Are you paying it on time or early?

22:25

In the business world, we call it DBT,

22:27

days beyond terms. If you're one day past the due date,

22:31

you're one day DBT. So they're going to look, and this is

22:33

why if you look at your credit reports, there's a lot of these sections that say,

22:37

Hey, what's your quarterly DBT? What's your annual DBT?

22:41

What happened to your DBT last month? Days beyond terms is really, really, really, really

22:45

big important factor. So we're looking at how much outstanding bills

22:49

do you have and how are you actually

22:51

paying those as well? Are you paying them on time?

22:55

Are you late? How late are you on average?

22:57

These are factors that their computers are immediately

23:00

taking into account. They're also looking at your utilization ratio.

23:04

Now in the business world, business credit reports,

23:08

eh, they don't really care about ratio.

23:10

Experian does, Equifax and D&B, really minute

23:13

factor. Their main scores don't even look at utilization,

23:17

D&B and Equifax, Experian does, and it's

23:20

like 10% of your total score has

23:22

to do with utilization with Experian. So for the most part, the business world,

23:25

not as big of a deal as the consumer world, you want to keep your balances

23:28

low compared to your limits. It's okay to put a lot of money

23:32

on the credit cards. They want to see that, but they want

23:34

to see you're paying them off, paying them down and getting your limits close to as

23:38

little to zero as you possibly can get

23:40

and maintaining low limits. Now the next thing is the purpose of

23:43

the money you're looking for. Again, not a big factor with credit cards.

23:48

With loans and credit lines, they oftentimes want

23:50

to know what you're using the money for. Okay?

23:52

You got to be careful there. If you're getting a personal loan through Lending

23:55

Club, but you're using it to launch a new business, you might want to use the

23:59

money for some other stuff too. And then say, I'm using the money on

24:02

like pay off other credit cards, right? If that's what you're going to do.

24:05

I'm not saying to lie. I'm saying if I got $50,000 in

24:08

startup loan from Lending Club and I'm using

24:10

40 of it to launch a new business and 10 of it to pay off credit

24:13

cards, and they say, what are you trying to do here? I'll say, I'm going to pay off credit

24:16

cards because that's what I'm going to do. I'm going to take part of the money

24:18

and pay it off. So just keep that in mind that some

24:20

things they might not be welcome to. Using a personal loan to fund a business,

24:24

not something that a lot of lenders are going to want to see, right?

24:27

Using business credit cards, business loans, or business

24:30

credit lines to fund a personal car purchase,

24:33

not something they're going to want to see, right? So you just keep it in the categories.

24:36

Like if you're getting a personal loan, personal credit cards, you probably don't want to tell

24:39

them you're using that to fund a business because that's a separate category.

24:42

If I'm using a business loan or a business credit card, I probably don't want to

24:45

tell them I'm using those money for something on the personal side, different category.

24:48

We want to separate this and tell them that we're using the credit cards or credit

24:52

personal financing for personal purposes and business credit

24:55

cards and business financing for business purposes. Just some things to keep in mind as

24:59

we're doing that. Now, again, lenders and credit issuers, credit issuers,

25:02

we don't care as much about the purpose of the funds for a credit card, but

25:05

it does become a factor when you're talking about loans or credit lines.

25:07

It's something to keep in mind. Collateral. Good thing about business credit cards, they're unsecured.

25:12

And what unsecured means, it means we're not providing any collateral to offset the lender's risk.

25:18

But if we are getting a loan or

25:20

a credit line, sometimes they will want to

25:22

leverage some kind of collateral. So it's good for us to know coming

25:25

in, do they require? Is this unsecured or secured?

25:28

It's a simple question to ask for a loan and credit line.

25:30

Is it secured or unsecured? If it's unsecured, you're good.

25:33

That means no collateral is needed to get

25:35

approved. If it's secured, well, then usually something is

25:38

being used to secure that. A secure credit card, usually you're fronting money,

25:42

right? They're going to give you a credit limit equal to the amount that you prepay on

25:46

that credit card. But loans, credit lines, sometimes they may take

25:49

your cap receivables or real estate or your

25:53

house. I mean, any of those things into collateral.

25:55

So is it secure or unsecured? If it's unsecured, you're good.

25:57

You don't need collateral. If it is secure, they want collateral, then

26:00

it's a good thing to say, what are you looking for for collateral?

26:03

SBA, for example, they want collateral equal to

26:06

what you're borrowing. So if I'm borrowing $100,000 from SBA,

26:10

they want me to have $100,000 worth of collateral to get that $100,000 loan.

26:14

So it's a good question to ask. Is it secured or unsecured?

26:16

Oh, it's secured. What kind of collateral are you looking for?

26:19

Those are good questions to ask. And then of course, the last thing is

26:22

they really care about your payment history. And it really is the most important thing

26:26

they care about. So important that Dun & Bradstreet's main score

26:29

and Equifax's main score is 100% based

26:32

on how you pay your bills. Experian's main business credit score is 85%

26:36

based on how you pay your bills. So paying your bills on time is the

26:39

most important thing in the business world to maintain good business credit reports.

26:42

And honestly, it's the same thing on the consumer credit side. The biggest factor that affects your consumer credit

26:47

score is payment history, 35% of your

26:49

score. So again, you've got to make sure you're

26:52

paying your bills as agreed. Now, as we heard earlier, somebody says, Hey,

26:55

I messed up. I didn't pay one. It went to collections.

26:58

That's okay. Then keep in mind, the older that account

27:01

is, the less impact it will have on your score.

27:03

And the best way to offset a negative is to add positive.

27:06

This is why I tell people you never want to stop building business credit because when

27:09

you're building business credit, you're putting positive, positive,

27:12

positive on there. And if you make a mistake, you go

27:14

late, you have a collection, the positive outweighs

27:16

the negative, and you'll still maintain really good

27:19

scores because the scores are an average of

27:21

how you pay your bills. So the key here is to get as

27:25

many accounts as we can to report to

27:27

the business credit reporting agencies, then pay those

27:29

accounts on time or early. And that will give us good scores.

27:33

So to recap, understanding the factors that affect

27:36

your business credit card approvals, credit score, consumer

27:40

and or commercial credit, right?

27:42

There's credit cards that will look at just consumer credit ones that will look at just

27:45

the business and one that will look at both. So we need to make sure that we're

27:48

building business credit and fixing any damage on

27:51

either our business or consumer credit reports. Business revenue.

27:54

Remember, business credit cards are no doc.

27:57

They're going to ask you for your revenue, but not verify it.

28:00

Loans and credit lines. They will verify that revenue.

28:02

Also keep in mind, they're going to look at your financial health and your financial health

28:06

has to do with whether they have your financials, the business credit reporting agencies, or they

28:11

don't. And if they don't, they'll look at the number of employees you have to determine your

28:15

financial health. The fewer number, the riskier you are from

28:19

their perspective. Industry risk. You need to know what your NAICS, your

28:24

NIACS code is. You need to do a search.

28:26

Is this not, is this a high risk industry? If it's not, that's what you want.

28:30

And that NIACS code and the exact definition

28:32

of your industry needs to be used on

28:35

those applications. Outstanding debt and liabilities.

28:38

Do you have other accounts reporting? How are you paying those?

28:42

And what is your balance in relation to

28:44

your limit, your utilization ratio? More important than the consumer credit side than

28:48

the business side, but it is something that they're looking at.

28:50

Also, the purpose of credit. We don't care for credit cards, but for

28:54

loans and credit lines, they will care. They're going to ask what you're using the

28:57

money for and stay in the right category.

29:00

If you're getting a personal credit card or business personal loan, don't say you're using it

29:04

for business purposes. If you're getting a business loan, don't say

29:06

you're using it for personal purposes. Keep it in its own category.

29:10

If you're ever asked for what that money is being used for, not applicable credit cards

29:14

applicable for loans or credit lines. And the other thing is how you pay

29:18

your bills, right? We got to make sure we're paying our

29:21

bills on time and get as many accounts reporting as we possibly can.

29:24

And remember, collateral is not needed for credit

29:27

cards. They're unsecured debts, but loans and credit lines,

29:30

oftentimes they are. So it's good to ask if it's secured

29:33

or unsecured, so you know. So those are my best advice.

29:36

And again, I'm going to throw up here. One of my best guides has been downloaded

29:39

over a million times for building business credit.

29:42

And this helps you. You can scan the QR code or go

29:44

to credit suite.com forward slash E I N to grab it.

29:47

And this will map out the steps to get business credit cards without personal guarantees and

29:51

without personal credit checks, which is pretty cool.

29:53

And a lot of it will help you build your business credit, which makes you more

29:56

livable as well.