How To Use Your Money To Build Your Business Credit

Oct 21, 2022 | Blog

When I started my business, I had a dream but had no idea how to fund my plan. At that time, I wanted to fire the boss and work for myself. It was only until a few years later that I learned how imperative it is to have business credit. No one had taught me that my credit score should be 700. Today’s world revolves around your credit history. Lenders want to know if you can handle your money before they give their money to you.

Do not take the elevator when it comes to the process; take the stairs. There are a lot of people and businesses out there that will do certain things or pay $500 to increase their credit score to 750 in less than three months. Do not listen to them. Take your time and learn how things work so you can be successful. Lenders know if you take a shortcut.

Follow the steps below so you can start building your business credit.

Step 1

Understanding your credit and fico score. Look at the chart below to help you know the difference.

FICO Score	Credit Score
90% of creditors look at your FICO score not Credit score.	A credit score is a number between 300–850 that depicts a consumer’s creditworthiness.
Remove discrimination from the lending process.	The credit score model was created by the Fair Isaac Corporation, also known as FICO, and it is used by financial institutions.
Consumer can access their own score, but lenders will have access as well.	A credit score of 700 or above is generally considered good and may result in a borrower receiving a lower interest rate, which results in their paying less money in interest over the life of the loan.
740-799 score is Very Good	A person’s credit score may also determine the size of an initial deposit required to obtain a smartphone, cable service or utilities, or to rent an apartment.
• Payment history • Total amount owed • Length of credit history • Types of credit • New credit	• Payment history • Total amount owed • Length of credit history • Types of credit • New credit
2014 FICO 9 was launched to help ease medical debt on FICO scores and allowed consumers access to credit.

If you require support in this area, then get the help you need! It is okay if you do not know everything. Business credit is no different than personal credit. The foundation is the same. Refer to the chart above to help you stay on track.

How Do Secured Business Credit Cards Work?

Secured business credit cards give business owners the convenience of charging the company’s expenses to a credit card and the opportunity to improve their credit score, which is the key to qualifying for a large business loan or credit line in the future. Secured credit cards allow business owners to set their spending limits, so they are good for business. These cards require a refundable deposit that acts as a line of credit.

How To Choose a Secured Business Credit Card

Strive to avoid annual fees.Some secure business credit cards charge a yearly fee, but I suggest you look at a secured card that does not charge fees at all. Any upfront fees chips away at the first bank deposit credit limit and forces you to start your credit-building journey with less credit available.
Check minimum and maximum deposit amounts.Check the minimum deposit amounts to make sure you have the money to deposit available. If you only have one card, ensure that the expenses you want to charge to a secure card will not exceed 30% of the total amount you plan to deposit. This will avoid high credit utilization and the negative impact on a credit score. Make sure that a maximum deposit amount does not become a limiting factor in spending, even if you plan to exceed the recommended credit use of 30%.
Make sure you consider any reports to all three credit bureaus.The value of a secure credit card is an opportunity to build credit, so it is essential that your card reports your credit movement to the three credit bureau agencies. Both cards on this list report your credit bureau payments and balances.
Check for fees and read the fine print.Be sure to check the fees hidden in the fine print. Some secure credit cards charge an application fee and an annual fee, and many charge monthly maintenance fees.
Rebuild your credit first.Before applying for a business credit card, it is sensible to improve your credit.

Step 2

The Best Secured Credit Cards To Open

Bank of America	First National Bank	Open Sky
$1,000 minimum deposit	$200 security deposit to get a $200 initial credit line	$200 deposit
No annual fee	$39 annual fee	$35 annual fee
Earn 1.5% cash back on all purchases	Min Deposit of $2,200	No credit check to apply
Travel and Emergency Services	Membership fees	$0 monthly fee