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Business Lines of Credit

Business Lines of Credit

At least several times per week, I get asked about how to get business lines of credit ESPECIALLY since the lenders are tightening up these days. Now, when I am applying for credit, I’m not too picky if it comes in the form of a credit card with courtesy checks or an actual line of credit.

I’m not too concerned about interest rates because I’m using them for a tool. Certainly, the lower the interest rate, the better, but if I have to get a card at 15%, I’ll take it. I won’t carry a balance on it or use it unless I come across a deal that I simply must use the card for and it makes sense.

Some people may wonder why I don’t fight for great rates, and I definitely try to get the best rates I can, but I’m not accumulating business credit for the sole purpose of maxing out my debt :-0! You see, I want to have as MUCH money available to me at any given time in case the right deal comes along and I need immediate cash OR in case I need some extra funds to grow my business.

There are a handful of things you need to know about the business lines of credit I’m talking about here:

  1. The credit issuers WILL look at your personal credit to make their decision
  2. Your personal credit doesn’t have to be as high as you might think, however!
  3. The inquiries will show on your credit report (you may or may not be able to get them removed)
  4. The actual credit cards will not show up on your personal credit unless you default on the payments

Now, I have a strategy that has proven to work for me and my partners. A mortgage broker or credit expert or credit repair person may have a different opinion, but this strategy has helped me acquire PLENTY of lines of credit for multiple companies. And, believe it or not, it’s helped me boost my personal FICO score because I no longer carry any business expenses on my personal cards. And remember… the business lines of credit don’t show up on my personal credit report. (My score’s gone up over 50 points in the last 6 months despite all the inquiries).

By the way, it’s a good idea to pull your Annual Free Credit Report once per year and make sure there are no inaccuracies on it. If you need to work on it, then this is a good time to start. If not, it’s like having a credit checkup once/year (NOTE: You do not get your score with this report)

So here’s my strategy:

  • Every 6 – 8 months, I go on a “credit run”
  • I apply in one night for as many credit cards as I can. I hold all the offers I get in the mail until I’m ready to do this. I actually have a mortgage friend that pulls a report for me complete with scores and all for my own knowledge. (The reason I do it every six months is because the inquiries can affect the credit decision. Six months gives you time to remove inquiries that you can have removed and it also gives enough time for those which stay on the report to carry less weight)
  • Then, I file all the cards when they arrive and keep notes on credit lines, how to access, etc. I keep 1 card/company in my wallet so I can use credit cards only for business expenses

That’s it! I know you’re looking for something more complicated, but that’s it. Sure, you can get business lines of credit from larger institutions once your company is established. There are also companies out there that you can hire for a few thousand dollars to go and get your business lines of credit in place. That’s up to you, but this is a great place to start. Plus, you can use this strategy to increase your personal credit score, which these companies will STILL need in order to get credit on your behalf. Remember, they’re looking at your credit as the guarantor.

The last time I did this “credit run”, I got over $100,000 with 45 minutes of my time.

There’s a cyclical effect to this as well and that’s when you start using your business credit for all of your business expenses (and if you’ve used your personal cards for business expenses, you can do a balance transfer and get them off your personal cards). This helps increase your score because your balance to limit ratio is reduced and now your personal cards begin to increase your limits and send you 0% offers!

There’s a myth out there also and that’s that once you have one business card with a company, that you can’t get another. There are some companies where this is the case, but many do not have a problem extending you multiple lines of credit. In some cases, they’ll extend you multiple lines of credit for a single business. I had AMEX once give me 2 lines of credits totaling $45,000 for the same company.

You can try virtually any credit card company, but the following have proven to be very easy to work with and extend credit quite simply. I have at least one line of business credit with each, and 2-4 lines with most of them for different companies:

  • Advanta
  • Bank of America
  • First Equity
  • Capital One
  • Chase
  • American Express
  • Discover

Even if your credit’s not where you think it needs to be, it’s a good idea to apply for a line of credit from at least one of these sources (American Express and Capital One are pretty easy to get). If you get denied, you can get a free copy of your credit report and go from there.

If you DO need to work on your credit, I recommend a few things – in this order:

  1. See if there’s anything you can do on your own to improve your credit. I used Donna Fox’s Credit Millionaire System years ago to bring up my credit 80 points in just over 30 days by following just one piece of her advice (Click Here listen to an interview I did with her a few months back)
  2. Hire a credit expert to fix anything that you can’t do
  3. Follow the strategy outlined above for the “Credit Run”
  4. Be patient. Unfortunately, you can bring your score down instantly, but it takes time to bring it back up…

Let us know what results you have with the companies above (or if you have any others that have provided you with lines of credit that you wan to share)

The time is now to build as much credit as you can to be in a position to capitalize on the current real estate market. The truth is, if you have the money, you have the power! You can buy non performing paper at MASSIVE DISCOUNTS. You can buy tax liens. You can buy REOs directly from the bank for big discounts. Just do whatever it takes to legally and ethically build your credit lines!

Oh yeah… and by the way… an agent in my real estate office told me that she’s gotten offers for business credit cards even though she’s had a short sale on her personal credit and hasn’t paid two other mortgages since October and is negotiating short sales on both of them. Maybe the banks are just trying to keep as much performing credit as possible on their books!

This post was written by:

- who has written 93 posts on Real Estate Training Academy.

Heather Seitz is the lead trainer for Real Estate Training Academy. For the training programs provided by Heather, Click the Training Courses!

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10 Responses to “Business Lines of Credit”

  1. Cheryl Stahl says:

    Heather, So, are you saying I should get credit my business name and for now it would be my “cleaning” service? Should cards be put into the business name too? Am Ex just lowered my credit line because of the bad reports they got from credit company’s AND my chase home equity loan shut that down. Very discouraging I have a perfect property I want to offer on AND I WILL FIND A WAY thinking about someone as an equity investor with me any ideas on that? I listened to your friend when she was on your Webinar one night and she was great I will take time to listen again.

    Thanks for your help on this hopefully I won’t have to wait a year before I buy a property. According to Mike Collins you don’t need ANY money to buy whole sale.

    Cheryl

  2. Vinh Tien says:

    Yes, get your credit card in your business name. Note, you must not use names with “investment, construction, real estate, realty,..buy houses, etc…you get the drift”.

    REASON: We’re in a bank/mortgage recession and guess who gets the blame…real estate businesses, from loan officers to banks to construction to rei. I can’t blame them, while most investors try to do the right way, there groups of flashy millionaire-behind-bars-by-night that are unethical and caused major turmoil in the rei industry.

    Back to Credit, once the credit card is in your business name, it will only report against your newly create business credit account Duns; and not report on your personal credit.

    Start yourself a corporation with non-Real Estate name business and not categorize your business as real estate. Use it as your Holding company. Remember, it’s only a business name not a reflection of you, No attachments. If you do not have a 680 or above, fix your credit or use a credit partner.

  3. Yes- it works.

    i would like to stress the importance of doing it in one day. Lenders SEE the pulls of others and will consider this within their approval process.

    REgarding lowering rates and increasing lines. I would do the same time of Run. for example- if you pay down a card(s) to zero, contact them and request a lower rate or increase in credit amount, my experience is i would usually obtain one or the other 95% of the time.

  4. Christie Seymour says:

    I’ve read and have some business credit in my corp with a credit partner as the garantor because I did have bad credit. I used these lines of credit to boost my personal credit up. It is now at 720 but I still have a BK on my credit report. It is 7 years old. Should I try now with my own name for these business lines of credit?

  5. mark says:

    Are these credit card applications comming in the mail? Or are they being filled online? Its been 2 months since I file my LLC papers and the only one to send me an application was Capitol one.

  6. T says:

    Hello.

    Thanks for the iformation. I am in the process of getting my credit straightenend out, I have a question…..does it matter how long your company has been in existence? I know some lenders would like to see 2+ years seasoning, but i have also heard some people say it does not matter the lenght of time. Please advise.

    Thanks
    T

  7. halison says:

    Heather i followed your examples and they worked like a charm. I accrued over 200k in my business name.
    heather yu once had an acquaintance who specialized in credit repair, i cant for the life of me find her referral on your site… what happened to her and is she still in the credit repair business. i would like to use her services. i am not talking about donna, i bought her system two years ago.

    best regards

  8. Dee says:

    I am new at this, does anybody know of any private lenders

    who I can partner up with? I need somebody to buy the

    properties, then split the sale fee from the

    buyer/flipper.

  9. One sure way to start receiving multiple credit card applications is to subscribe to any business magazine, like Fortune, with your biz name.

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