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A Business Credit Card is Essential

If you are running a business out of your home, then there are many details that you need to keep in mind. You should probably be reading up on as much information that you can get ahold of on having a business at home. One of the most essential pieces of running a bussiness from home that you absolutely need to know from the start is to get a business credit card to use for everything related to your business.

Unfortunately, as a business consultant, I have talked with far too many business owners that come to me after failing at running a home based business. Why?  Poor management of finances. Far too many people use their personal savings, retirement, home equity, and credit and that is a very dangerous thing to do.

I thought that the importance of seperating your business credit and personal credit was obvious, but maybe it is not.   Registering your company with the business credit bureaus and getting business credit cards that don’t show up on your personal credit ultimately allows the home based business owner or Entrepreneur to have the freedom to truly keep their personal finances and their business finances separate. This is essential throughout the year and obviously when it comes to tax season as well.

There is no reason why the finances of a home should be mixed up with the finances of a business. Keeping the credit profiles, credit cards, bank  accounts completely seperate will set you up for more funding options in the long run.

Here’s the bottom line: Entrepreneurs and home based business owners need to separate their business and more so because they usual operate from virtual office spaces or from home. This will be impossible without registering your company with the business credit bureaus and establishing  business credit cards that do not report to the personal credit bureas. So apply  If you want a widly succcessful enterprise you must do what widly succcessful business tycoons do.  It will make a huge difference to the organization and success of your company and ability to raise capital.

 

A Crash Course In Credit Scores

If  you had no idea that there is a totally different credit scoring system for businesses than there is for people, don’t fret—I’ll explain.

Personal credit scores range from 350 to 850.   All three of the credit bureaus—Equifax, Experian, and Transunion—offer  FICO credit scores using a complex mathematical formula developed by Fair, Isaac and Company, but they each give the scores a different name: At Equifax, the FICO is known as the Beacon credit score; at TransUnion, it’s called Empirica; and at Experian, it’s called the Experian/Fair, Isaac Risk Model.

Business credit scores range for 0 to 100.  The major business credit bureaus are Dun and Bradstreet and Experian Insights. Unlike their counterparts the business scoring system is not complexed.  It is quite simply based on payment history.  Each credit bureau does however, give  the scores a different name.  At Dun and Bradstreet the score is called a PayDex and at Experian it is called an Intelliscore.  Here is the bottom line in this crash course:   Good business credit scores PLUS good business credit scores  gets you access to lots of business funding!

5 Reasons Business Credit Is A Must

Entrepreneurs typically make one or more financially devastating mistakes when financing the launch, operation and/or growth of their businesses. I know I have made huge mistakes in financing and running  my business. In most cases, Entrepreneurs and Business Owners don’t even realize that they’re making a mistake.  You see, as an entrepreneur, you’re hardwired to enjoy a greater level of risk than the average person. But do you enjoy the thrill of business so much that you’re willing to risk:

  1. -Being hounded by creditors?
  2. -Declaring bankruptcy?
  3. -Being denied a mortgage or business loan?
  4. -Draining your savings and retirement accounts?
  5. -Losing your house?

If you’re like most entrepreneurs, coaches, consultants, and service based business owners I’ve met over the past 11 years, you’re in danger of facing all of these horrific problems.

And it’s all because of your business.

You see, entrepreneurs typically make one or more financially devastating mistakes when financing the launch, operation and/or growth of their businesses. In most cases, they don’t realize that they’re making a mistake.

And to tell the truth, even when they do realize they’re making a mistake … they lull themselves into thinking that the consequences will be a minor annoyance.

Until, one day, they can’t qualify for a mortgage. Or they can’t get the to-die-for financing offered on the new car they’re buying.  Or the bank turns them down for that much needed business loan.  Or they’re hounded by creditors and eventually have to declare bankruptcy.

And it is all because they use their personal finances to fund the launch or expansion of their business. They then use personal credit cards to pay for business expenses. If you are in business or thinking about starting a business, business credit is a must.

Let me explain, most business owners have no idea that they can establish business credit and even fewer know how to how to establish business credit. If owners would take the time necessary to educate themselves about establishing credit they would no longer have to use their personal funds for start up capital or working capital.

If you have set up your business profile correctly there are a number of banks that will lend to brand new start up business. That is right, brand new start up business with no track record whatsoever. The banks will extend unsecured business lines of credit so they can have the start up capital they need to finance the business of their dreams.

Make no mistake about it; business credit is a MUST for every business owner. Don’t put your personal assets at risk;  finance or fund your business the right way!

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