Plenty of real estate agents have heard about the benefits of business credit, but a surprisingly small percentage of agents elect to use this valuable resource for growing their real estate business. If this sounds like you, learning more about business credit is absolutely something you should do. This will equip you with the knowledge you’ll need to take full advantage of the loans and credit cards available to you as a real estate professional and will make it easier for you to scale up your business.
Below, we’ve covered some important business credit basics and the benefits of business credit for real estate. For more in-depth information and tips on building business credit, be sure to listen to Pat’s podcast interview with Ty Crandall, a well-respected expert on business credit.
Business Credit Basics
Business credit isn’t all that different from personal credit, but it’s important to be familiar with a few of the basics of business credit. Nerdwallet’s article on business credit is a great place to start when learning about the basics of business credit. Here are a couple important points to remember:
- A business credit score is similar to, but not the same as, a personal credit score. The range and methods of calculating business credit scores are slightly different than with personal credit scores. Don’t try to interpret a business credit report in the same manner as you would a personal one.
- Your business credit is not private information. While your personal credit report is only available to you and select parties, your business credit report is public information. In fact, you can even look up other companies’ credit information if you’re willing to pay for it.
Benefits of Business Credit: Higher Funding Capacity
Instead of utilizing business loans or business credit cards to fund their professional endeavors, the majority of people rely on consumer credit, friends, or family members. Not only can this cause problems with personal finances, it can place unnecessary stress on personal relationships. Additionally, by relying on acquaintances or personal credit to fund business pursuits, people miss out on one of the greatest benefits of business credit: higher funding capacity.
According to the Small Business Association (SBA), limits and capacities are often 10-100 times higher for business credit accounts than they are for consumer credit accounts. If you’ve been relying on consumer credit for business use, imagine how much more you’d be able to accomplish with the higher funding capacity that business credit provides!
Benefits of Business Credit: Less Personal Credit Impact
In addition to higher limits and capacities, business credit can be used to keep your personal and professional spending separate. In the event that your business ever runs into financial trouble, this could lessen the risk of negative impact on your personal credit.
However, if you’re the sole proprietor of your real estate business, keeping your personal and business credit completely separate isn’t going to be possible. So, if you’re running your own real estate business and elect to utilize business credit, be sure to keep your accounts in good standing to protect yourself as well as your business.
To learn more from Ty Crandall about the benefits of business credit and improving business credit scores, be sure to listen to the complete podcast interview.