Business Credit 101 | How To Build Business Credit FAST
hey what's going on cash flow hackers it's Chris life180 I'm excited uh to be doing this this interview I've been doing a lot of thinking on this stuff personally lately uh talking about the concepts of business credit and um just ultimately how do we for all these entrepreneurs out there that I know uh are kind of in the same position that I'm in how do you how do you segment your life from your personal life to your business life and really get your finances dialed in and so I've got who a guy who's become a friend of me Sebastian Boyer uh on this call we're going to be doing a really fun interview I'm excited to kind of introduce them to the group because Sebastian and I have been working together um he is a licensed life insurance guy um he is does a lot with the infinite banking concept you can follow him uh the approved guy on YouTube I'll put a link down in the description below uh that's awesome but he also is uh the owner of a company called business credit 101 and he's also the Director of Finance for a company called orangefy and what they do is I and you can kind of get more into this Sebastian you know as we get into it but they're basically like a business uh credit broker or business loan brokerage company is that about right correct yes right awesome so so he does a lot of stuff he's he's he's got courses teaching how to build business credit he's he's um honestly he's just amazing with this like any anytime I have a question when it comes to anything to do with business credit or getting loans or credit cards or anything like that for the business specifically he's kind of like the guy that I lean on and so I thought it would be really great to get him on here uh interview him ask him questions about like uh you know where to start ultimately whatever whatever we think is going to be able to add the most value uh to you as you're getting introduced to the concept of going down this path of uh you know starting a business creating an LLC I think the a lot of people when they Sebastian when they create an LLC they feel like they automatically have this segmentation of their personal life and their business life and right it all just kind of happens and uh you know that's not necessarily the case and so um so I'm excited to get into this man so thanks for being here thank you thanks for having me and um I appreciate the intro and it's always a pleasure to to work with you and just to build together and and share stories and just work together it's awesome um so I guess just to just to touch on like where do we start you know yeah obviously you know we're talking about business ownership here entrepreneurship right yeah um so one one big mistake people do is they they think they can do it as a sole proprietor so number one that's a no-go don't even go down that route yeah so let's just x that out you need to actually form a a LLC or escort C Corp you know you know with an EIN number um but the sole proprietorship angle is is not gonna it's not gonna cut it and unfortunately I've seen people who do that and they're you know they're they're making money um as a sole proprietor and then they have to form a company and then they get an EIN and then a bank account and they're basically starting from square one after three four five years of operating as a sole proprietor so just number one don't do that make sure you're actually performing a legitimate business um get yourself set up with your secretary of state obviously what Secretary of State uh what state you know there's different states that you can operate in there's different advantages to that I'm not going to get into that but you want to get set up you want to um you want to get your EIN number and then you need to get your business checking account right don't operate you know your business using your personal and these are like little things that you think are just like automatically um you know just I have a business I'm going to get a business checking account but you but you'd be surprised how many people are not operating with a business checking account though they have a legitimate business and so um when you're when you have a business checking and money is flowing into the business you start to record you know Revenue you start to record the businesses cash flow and income and so now the bank has something to look at to say that this business is a legitimate business now there's there's about 10 data points that Banks and lenders and the business credit bureaus look at besides your structure that you have a legitimate business besides having a business checking account that's two of them right but there's little details that a lot of especially home-based business owners um yeah don't pay attention to uh because you don't think it matters and the thing is you don't need to do these things to make money so it's not going to stop you from doing business but right if you want to position yourself so that you are attractive and considered credible that's the word they use called credibility right in the eyes of the banks and the lenders these 10 basic data points um need to be met and simple things all right so your business name right your EIN your business bank account a phone number in the business not a personal cell but a business phone number for the business right yeah and there's there's ways to save money on that you can set up a legitimate voice over IP business line that's very affordable and have that forwarded to your cell phone what about getting a business cell phone line like actually that's okay as well it's as long as it's actually a business account in the business account in the business name right yep um and then of course um your email you know a lot of folks just use Gmail Yahoo or free email accounts again it doesn't stop you from doing business but when a bank or lender looks at that it tells them whether or not you're really a serious business owner or maybe you're treating this as a hobby right yep um so you know setting up a domain name with a basic website because now the internet and your website is your storefront right very simple to do very affordable you don't have to go crazy you know you can build your um you know elaborate super website later but at least have something up right with a contact page and you know that shows that you're open yeah something that's that shows that you're open and that you're reachable and that you're legit um so you know that's going to be your domain name your email account right um and um there there's a few things you you can do to be remain you know private like you know if you want to kind of mask your identity um in other words if you don't want the public to know who's the owner of the company right when you're forming the company um you can make sure that you have a registered agent which could be either the attorney or CPA or whatever form firm is helping you set up the company um a registered agent is a buffer between you and the Secretary of State or anyone trying to serve you documents um your name is not on public record per se and so your address is not listed you you don't have to have a business address you can work out of your home but it's public record okay right so anyone can go to Google but in your business address and find your street address that you live at see your car on Google Maps maybe you were outside washing the car that day and there you are you know so if you want to remain anonymous you have a registered agent and then when you buy your domain name you you purchase the extra ten dollars to make it private it's that simple right having the phone number the email all these things you know create that separation that barrier um and um and then ultimately you want to get listed on 4-1-1 directory and you want to um you wanna um then set up a duns number with dun and Bradstreet got it right so that there's three major business credit bureaus there's done at Bradstreet there's Experian business credit division and then there's Equifax now there are others including public records records with LexisNexis okay um and there's there's credit safe there's paynet but those are I guess you could say smaller ones that are not as important and if you focus on the big three then the others will follow suit um done in Bradstreet is what everybody's like concerned about oh I have a duns number I hear that a lot oh I have a duns number and that's like the equivalent of telling me you have a bank account number it's great that you have a bank account but if you're not depositing money in the bank account it's an empty account it has no value right so a duns number is just an account number it's not building your credit their credit score is called a paid X score paydex score paid X paydex paid X right to get a paydex score you need to have at least three trade lines reporting to Dun and Bradstreet so okay so that's fair so let's let's start there and let me ask you a couple questions about that so you go out you do all the things you're talking about you get your duns number um and your your uh the entrepreneur business owner and you need to get three trade lines do you have to personally guarantee those trade Lines no the the there are trade lines that you can personally guarantee but you don't need to there are several trade lines in my course I have about 12 of them that are not personally guaranteed um that uh will give you an account with no prior business credit so that you can you know establish business credit that's the hardest part is that initial tier one step one of building yeah um it takes about 30 to 90 days for those accounts to report to the bureaus and um sometimes you have to make multiple transactions on those accounts because credit is nothing but a record of a transaction right that's all it is right yeah um with the personal credit it's pretty much automatic but with the business credit you have to be more intentional you have to set up that duns profile when it comes to Experian and Equifax they're they are a little bit more automate automated once you establish an account that reports to those bureaus then they will report and create the account for you so you can't really go create an account with them and then once you have an account then you can go update that account with your information right because a lot of times they're going to have missing pieces of those data points we talked about um you'll they also record your business um Revenue um you know your your profit margins like they all that is on public record and if you update that regularly then when when Banks lenders and credit card companies and and you know different institutions are looking at you and if they may be looking at Experian or Equifax it's just going to help your your credit profile um and that's what's going to help you qualify to get the higher level credit cards as a business and the better business loans and all these different things correct so so the thing about this is that it's not cookie cutter there's certain Banks and lenders that may only look at Equifax there's certain that ones that might only look at Experian some of them may be only looking at dun and Bradstreet some of them may look at a mixture so there's an there's an overarching uh body that called the Small Business Financial exchange that collects data from these bureaus and they report that data to the SBA and then the SBA creates a business credit score called the sbss score so you know if you are in in business for more than a year two to two years and you're looking to get approved for an SBA loan you have to have a legitimate business credit score got it right now there's some business credit cards and I'll tell you this 99 of the business loans that are on the market including the business credit cards are going to require personal guarantee no matter what right which means that you can have amazing business credit but your personal credit is still relevant and important and you can't just ignore that right so so people are a lot of people are like oh I have business credit but they have 550 personal credit like yeah yeah there are loans out there sorry and that's not gonna fly for the most part no there are products that you can get approved for with really bad business personal credit but now you're talking about very high interest rates and very aggressive terms and you know if you're looking to get the better rates and the better terms and you really want to have you know powerful uh leverage then um you know your personal credit along with the business credit along with your revenue and showing that the business is is Cash flowing right is is important right so that's another mistake that business make owners make they you know yes we want to save money on taxes we want to write off as much as we can but if you're Lo if your goal is to expand and grow your business and you're look you're going to be looking for an expansion loan you need to show that the business is profiting you can't show that you're running in the negative or breaking even so there has to be a balance between the tax write-offs depending on how much revenue you're bringing in now if you're if you can write off as much as possible and still show strength and growth then fantastic but after write-offs if you're showing either you're just breaking even or you're in the negative that's good for your tax purposes but you're not going to be able to qualify for that SBA loan it's no different for people who who are entrepreneurs that want to buy a house you know and and they're using it personally and they try to keep their income low but that's going to make us who don't qualify for a house exactly exactly so you have to balance that that those parts um and uh and just be holistic approach it holistically right your personal credit your business credit your Revenue your assets all of these things are going to come into play depending on the type of loan that you're trying to get approved for so let me let me ask you this if if you got a pretty much 99 as you said um you have to put a personal guarantee on it anyway what's like what's the importance then of getting a business credit score if it's got to be personally guaranteed anyway can't you just couldn't you just show all the revenue and do business and uh just go get a personal loan against it anyway which is because the risk would be really no different so the answer is yes you could you could but having the business credit is going to there's going to be some loans like I said like for example even an SBA loan that you have to have that SPSS score right okay so um you can have all the good uh credit and uh Revenue but that score still needs to be there there's a there's a lot of the business credit cards require business credit even though it's personally guaranteed right got it some of them don't some of them yeah you if you're starting off a new business you have excellent credit you're at 750 to 800 personal credit you have you know good income um you can get a business credit card without a without having business credit right um but there's going to be limits to the accounts that you can get access to so if you're someone who's really aggressively trying to get access to the maximum business credit limits and lines that are available and you're looking at getting you know especially looking to get zero percent interest promotion business credit cards then you want to focus on building your business credit to complement the personal credit right um and so ultimately it's a compliment to the personal credit and the personal credit is a compliment the goal should be to be able to secure financing whether it be credit cards a line of credit or a loan in the business where it's not on your personal credit at all right because even though it's personally guaranteed it's not going to show up on the personal credit got it so now that debt on the business side let's say you have a twenty thousand dollar credit card with a nineteen thousand dollar balance on it if that was on your personal credit your your personal credit score is going to tank because of high utilization but on the business side it's not going to show up on the personal so that's a big that's a big deal I mean to be able to do that uh and and that would be one of the big reasons that you would want to make sure you're focusing on your business credit is is yes you might have to personally guarantee it to a certain extent but by building your business credit you get it to the point where you don't have to have it all on your personal personal side of it so it's going to insulate and protect uh your personal credit from the from uh like a debt utilization perspective because I I think a lot of people don't realize the impact that like the use of credit is a huge factor in what your score actually is oh yeah definitely so so ideally you when you are looking to apply for a loan or a line of credit or credit cards you want to make sure that your credit card specifically your credit cards your utilization not overall but individual credit cards are under 35 as close to 30 percent or less right under 35 is is great right um anything over that your scores are going to start to go down and then you start to show higher risk for the banks and the creditors right so the thing is this there are resources available that we can tap into like and and I and I could provide them um where you can access your three Bureau credit report see exactly what the banks and lenders are going to see and you can check to see what are your not just what are your scores but what are your limits reflecting on your credit report and here's the problem I could pay a credit card today let's say I have a twenty thousand dollar card nineteen thousand dollar limit and I'm gonna go ahead and pay that down to you know three thousand dollars so I'm way under 30 right I could do that today it's going to update with my credit card company within 24 hours but there's a statement closing date which is the date that the credit card company reports that data to the credit bureaus that's not the due date it's a different date and it's not the same for every card or for every customer so I could have 10 cards with different statement closing dates yes and then so I make that payment it updates on my credit card statement and I think I'm great I'm gravy my my credits but it didn't update yet so I go and apply for that car for that house for that credit card and I get the client or I get a higher rate interest rate it's right funny yeah yeah I'm laughing because I just went through this personally so my wife my wife um got this new credit card right like for the house and like and and it was not a huge balance it had like I think like a five thousand dollar limit or something like that right and so um she went out and um was buying all sorts of stuff for the house and like whatever it was just put on the credit card and we paid it off you know and so like no interest spent no anything but then she was like she got a notification that her credit score went down and she's like what the heck like why did that happen and I and I was like so you know we had to have this conversation she's like but I paid it all off so I shouldn't my credit utilization shouldn't have been you know negatively impacted I was like well but you spent over and it closed you know and they reported it before you paid it and therefore in the eyes of the credit bureau you're you know you are utilizing 80 of the maximum credit availability on this card and they're gonna whack you for that yep it's all about timing and it's knowing when to and how to time it right but the thing is if you look at these reports you can see the last uh posted payment date or you can call the card and ask them and if you pay your balance that you want to pay give it at least seven days before that statement closing date then you will always reflect the lowest balance on your credit report and that's what most people don't realize and why they're wondering why is my credit score dropping it'll it'll adjust next month next closing statement right but for 30 days unless you have the same cycle of usage exactly then you're always going to be like what's going on but if you get ahead of it give it enough time to update with the bureaus worst case scenario you know what you could do you go to the credit bureaus and you can dispute it and they'll update it for you within three to five days they're gonna tell you because they're required it's going to take 30 days but it's not a like a dispute of a derogatory item it's a balance update so yeah they'll update it but you don't have to do that if you simply just time it properly and you know stay ahead of it and here's the thing Chris if if you're not applying for any major loans right yeah a car loan anything right in the interim having high utilization is not negative it's not derogatory sure it's just real-time reflection of activity of utilization yeah because your credit score is just a function of risk so the the lender knows the risk and so if you have if you're utilizing eighty percent of your credit score but you have on-time payments and no derogatory stuff or anything no collections nothing like that and then you pay that all down your credit score is going to reflect very very significantly very very quickly it actually could go higher than it was Prior because you're showing utilization and aggressive payback so like let's say two people have the same credit profile and let's say they had 50 000 of available credit and one of them did not use that fifty thousand or they used it very sparingly a little bit at it they didn't use it much the other spent fifty thousand but then paid back fifty thousand spend fifty thousand again and then pay back fifty thousand that one the scores are probably going to reflect higher because of that aggressive usage and payback sure and that record of utilization is going to make lenders feel confident that they can lend you larger amounts because you're spending and paying back larger amounts versus someone who's very you know very carefully not spending and just barely using the account so there's something I like to call it's I call it the compound credit effect okay all right and this is what happens if you leverage credit cards in particular credit cards properly right you take advantage of the zero percent interest promotion on credit cards and you take advantage of the rewards points cash back points travel points you leverage the credit instead of spending money from your checking account using a debit card which doesn't give you anything back you take advantage of these three four five percent rewards points right immediately pay it back so that you're always reflecting a lower balance yeah right and what's going to start to happen is these credit card companies are going to see how you're using that credit and they're going to start giving you limit increases they're going to start giving you new zero percent promotions so now you're you're 12 months zero percent promotion is going to get renewed for another 12 months so why do they do that why because you would think for the credit card company there's nothing in it for that because if they see they're doing that you're functioning like that and you're utilizing it and they're paying you bonus points are they are they like that almost seems and and I'm not saying this is how it is I'm just like my my my skeptic is coming out right it's like if I feel like the credit card company is trying to trap you in some way right they're trying to like let you do it because they know eventually a lot of people are not going to remain disciplined and they're gonna fall like you know what I mean like why why you know what I I just I agree with you that's that's maybe a part of it there's probably a large percentage of folks that don't remain disciplined with it and fall into a trap and end up you know paying the fees and whatever there are always going to be some fees like if you are taking advantage of zero percent on a balance transfer there might be a two or three percent transaction fee right yeah they make money there but there's something else it's called The Interchange okay what's that you know interchanges so The Interchange is the minor minute processing fees that occur whenever a credit card transaction is is created between a merchant and a and a consumer so they're making that money and that's where American Express makes all their money I didn't know the name for it it's called The Interchange so that that those fees they're they're minor like you know fractions of points but when you add up millions of millions of people you know creating hundreds of thousands of transactions you know it's well it would be billions of transactions you know that by itself they don't need to charge interest rates that's that's just yeah it's like what we talk about with infinite banking if we think about interest volume versus interest rate that's that's what you're talking about there you're talking about volume of just massive amounts of transactions exactly when you make little tiny amounts that'll totally Trump the the rate of return that's right that's it or you know or the the cost of that interest rate on your credit card so that okay that makes sense to me for the first time ever thank you yeah you're welcome so that you know that so if you leverage credit properly and you're doing it on your personal credit and then you build up the business credit and you start getting access to business credit cards now you have double the power you can leverage the business credit for the business and keep that personal credit for when you need it yeah right awesome and then once you get enough business credit you can start buying assets with the business credit like vehicles cars so here's what happens most business owners own or they they're financing a car in their personal name it's on their personal credit so that's increasing your personal debt to income ratio it's a 100 personal liability and then we're trying to squeeze out tax deductions on mileage and gas and you know maintenance on the vehicle because we are using it as business owners right if you can finance that vehicle on your business credit and now this is somewhere now where you can get that asset um and I'm calling it an asset because a vehicle in your name personally is a liability right right but in the business it becomes an asset right it depends on how you use it but if you can Finance it in the business this is one of the only places one of the few places that you can actually 100 100 remove the personal guarantee got it right so now you can Finance the vehicle 100 in the business no personal guarantee it's a business liability business asset does not show up on your personal credit your monthly payments to that vehicle you're paying for a business expense it's a business asset right so it's a it's completely different versus when you own it on your personal that's going to free up space on your personal credit you have no more power and available credit to do more on the personal side I love it I love it that's awesome so that's and you know with with you know with the Advent of uh programs like turo and different things I have clients that have have financed two or three vehicles Teslas and Mercedes-Benz on their business credit no personal guarantee and that's an income a passive income to their business that they just use you know with these uh Source resources there's turo and I think there's another one I forget there's a new one that people are using yeah yeah well turo and and we've done that I mean my wife and I have rented our car like because we used to travel back to Vermont so we had a Denali that we used to put up on tour every now and then when we were out of town for like three months you know it's like Alan just let it sit in the garage exactly and we'd rent it like probably three times or four times in that three month period and it wouldn't like we weren't looking to make money off it but it paid for the car it paid for the car you know that's something that's awesome it wipes out that expense you know what I mean like and it was literally minimal wear and tear was fantastic but what when you do two row like that and you do it through a business credit it genuinely is an asset because that that car is the asset creating cash flow and you're making a spread on the difference in the expense and the revenue created and so from that perspective you're creating that asset and when you have it through business credit when you do it personally you're always going to be limited to a certain extent on how many cars are going to give you loans for it's kind of like you go get a home right you get one primary home rate every other thing home after that is going to be an investment home or a secondary home and the rates start to change right right when you do it through a business credit can it can you speak to that at all like the difference in rates and expected expectations around that and how business can help you in that way so can't really speak to the rate so much um more so that that that as if it is generating Revenue then the business now has the ability to service that debt or more debt so they're not going to limit you to just one or two or three vehicles you could end up with a fleet of vehicles if you wanted to go that far you know what I mean right but like folks that are in the trucking industry Logistics Transportation you know not only are you able to get business uh you know Finance the vehicles in the business and it could be other businesses that have like big equipment like you know big printers or 3D printers or you know very expensive equipment or assets to the business all that could be bought you know through the business credit you can get you know uh dell um Mac um you know you can get five to twenty thousand dollar limits within the first two to three years and they even have a lease program where you just lease your your new uh device 20 get a fifteen thousand dollar you know most powerful Mac that you can imagine right and then at the end of the lease but it's all on the business credit and then at the end of the the lease term you just send back the device and they give you a new one nice so so let me ask you this let me ask you this somebody's starting off a business today right like let's just say today they started they they go and they follow the steps that you're talking about how long is it until they can go out and maybe get a credit card in their business because I know you've done a couple videos recently um and if you want I'll put the links to those down in the description below as well to the videos that you just did on the credit cards that you can get with no personal guarantees or something like that because like if somebody wanted to say hey I want to go get my business credit to the level where I can start to do this stuff with no personal guarantees how long does it take to get it set up like that if you're really diligent about doing this the right way so there's going to be levels to it so if you're if you're a startup um you're or even if you're an existing business right because I've talked to business owners 10 15 20 years in business that's how I started this actually because we're you know helping folks with financing talking to folks 10 15 years in business and they expect well I have all this tenure I can get business funding with no personal guarantee and I'm like okay well let's check out your business credit and they don't have any or it's very superficial they have to start at square one just like a brand new startup the only Advantage they have is that they have the tenure of the business the time in business and then the revenue where a startup has less time and they have to build up that that Revenue but as far as the credit building process it's going to be the same all right um so it's basically going to be between uh I'd say about 90 to 120 days to complete tier one where you should have around three or four accounts reporting on all three of the business credit Biers I mentioned Experian Equifax and um done in Bradstreet right um there's so you I in my course I have about 12 accounts and that's because some of them report to experience some of them report to Equifax some of the reports are done in Bradstreet so collectively you set up these 12 accounts you're gonna have the profile that you need to cover all of them it's going to take that 90 to 120 days nothing you can do to speed that up it's just the time it takes for those bit for those uh companies to send the data to those bureaus and for it to report and for it to show it now with that in place if you have excellent personal credit you could probably go and apply and get approved for almost any business credit card that you wanted to because you have the credit minimum credit requirements on the business side and you have really good personal credit they're still going to be personal guaranteed but there's there are alternative business credit cards that are not necessarily your revolving credit cards that are going to give you net terms those net terms could be 30 days 60 days 90 days sometimes they'll give you six months and sometimes even up to a year okay okay net terms simply means that it's like a charge card right so you have to pay back in 30 days but if they give you 60 days you have to pay back in 60 days there's actually no interest on them right you just have to pay it back in that time right because again they're making money on the interchange on The Interchange got it okay right so but they're looking at what are they looking at they're looking at the business credit and they're looking at the business Revenue well that's kind of what American Express does doesn't it it is I mean yeah that's that's basically but there's a lot more available besides American Express that that can give you a lot of spending power with these net terms and the the limits can grow twenty to fifty thousand dollars with you know 30 60 90 days until like I said maybe six months even in some cases right so when you combine these alternative and now those are no personal guarantee okay those you can get no PG because they're looking at the revenue they're looking at the business credit the the credit cards that are more like what we're thinking of like a revolving credit card account that you want to have that revolving minimum monthly payment option that's gonna require that personal guarantee now these charge cards do they offer like uh you know how American Express has pretty good reward points and stuff like that go with it do these other ones do the same they do they offer rewards they offer a lot of advantages um there's two I could just name real quick there's one called Divi um okay I'm an ambassador for them I have a video on them there's another one called revenued that's the one I think you're talking about I'm Ambassador for them I have a video for them there's a whole bunch of them capital on tap um there's a whole bunch of these accounts that you can get access to um and they're not personally guaranteed okay that's awesome so so let's let's talk about this for a sec so when you personally guarantee something and I think I know the answer to this but I want to ask it and have you say it probably more succinctly than I could when you personally uh guarantee something I go get a credit card right so you just mentioned charge card would be no need for a personal guarantee if your business credit is set up the right way if you go get a credit card and it's got to be personally guaranteed when you personally guarantee that business credit card and then the business uses a credit card how does that impact your personal credit score it does not does not it does not unless that's actually my answer than I thought you were getting unless so I did not unless you default unless you're def unless you default then it refers back to the personal guarantee okay so but if you if you're basically a co-signer that's because that's what a personal guarantee is right like you're basically kind of co-signing right like right you're guaranteeing that you're gonna back it up no matter what even if your business fails and so um so on a month in month out basis the credit usage on that even if it's a credit card and you're personally guaranteeing it doesn't it doesn't show up impact debt to income ratio on the personal side correct I would say 99 there's one card out there it's a capital one that will report on your personal credit the rest of the business credit cards do not yeah so don't get that one you know it's it's actually okay though because it's a starter card so if you really needed like if you didn't have the best personal credit and you really wanted some credit in the business name it's a card to start with um but um but uh but yeah the the for the vast majority of the business credit cards they will not reflect on your personal credit which means if you're maxed out on the business credit cards you're not impacting your personal but if allows you it allows you on that oh sorry I don't want to cut y'all yeah I was just saying if you default 30 days late then it's going to hit your personal guarantee on your personal credit so you don't want to do that got it okay so but from that perspective like if I had a ten thousand dollar credit card limit right and I'm doing like paid traffic and I'm utilizing that credit card to pay for my ad spend and I want to get the points and I know I'm going to spend it or I know I'm going to spend that money anyway right right I'm spending money on ads no matter what right right and I'm thinking about very specific situations here for me it's like if I know I'm gonna spend 10 to 20 grand a month in ads boom right like swipe rather than pay cash use a charge card build my credit pay that back every month get the bonus points you don't sound credit effect that's what's happening credit effect right yeah so now I'm able to do that without having a negative impact on my personal credit because I'm using the Ah that's yeah that's awesome and then you're getting the cash back or the rewards points travel points I know you travel a lot you know all of your hotel accommodations your flights could be covered by just your regular spending you know and even on the personal side you know for someone that maybe doesn't have that I don't know maybe you're just looking at this you're not a business owner you can still there are rewards points in cashback and travel points on personal cards too you know that you can leverage and um take advantage of if you're not a traveler there's certain cards that are are going to give you three to five percent cash back when you go buy groceries when you go to the gas station you're gonna go buy groceries you're gonna go to the gas station right the problem with people and when it comes to credit cards credit cards have a bad reputation because of how how um have they been abused and misused and people end up getting in to big trouble right yeah and as we know credit card interest rates are compounding so and they're high and it's high it's compound interest on the credit card so if you have a zero percent interest promotion credit card and you take advantage of that zero percent get the balances down to under 30 percent right before that promotion expires right chances are you can get another zero percent extension right keep leveraging that zero percent or once that zero percent expires you go get a new zero percent move the balance from that one to the new one and keep moving to one entry then exactly yep yeah so you can literally stay with stick with zero percent if you leverage the credit properly keep taking advantage of the rewards points um and look you could buy all your Christmas presents and you know birthday presents on points right if you're not a traveler right if you're a traveler you can pay for your flights and your hotel accommodations well it's just efficiency right we like it goes back to the volume versus rate conversation if you're able to get two percent to four percent worth of bonuses on every dollar you ever spend now when you go to get to Christmas time or you've got to travel for work or you got to travel for personal reasons take the family vacation like that's all money you were gonna spend anyway get it this way and you were able to get that two to four percent on every dollar you ever spend it makes it just increases your financial efficiency on a huge way yes is it is it more does it take more um responsibility and more intentionality and more planning yeah but just like anything as you start doing it it starts to become second nature and then you wonder why did I never do this before like I should have been doing this years ago right um for sure but yeah it's it's it becomes another uh Revenue stream or income stream you know technically and guess what those reward points and cash and travel points there's no taxation on that yeah that's awesome I mean yeah I've read articles about the a couple guys that like game the system and got hundreds of thousands of dollars of rewards points and no taxes you don't get taxed on that so there's another little way to you know to really leverage you know but you know a lot of times people think to themselves oh it's only two percent it's only three percent it's not that big a deal but again if you're doing it every day on every on your living that you're going to spend out of cash out of pocket anyways you just change the habit of using the what most people do is they use a credit card when they can't afford something yeah exactly and it can't be that yeah no you use the credit card when you can't afford it yeah because you can pay it right back and and leverage and advise that for most people yeah it's a difference between debt and leveraging yeah versus leveraging is going to give you either return on investment or give you uh cash back or grow wealth debt is just gonna take you down a rabbit hole you don't want to go there but but with that I think that's where people get in trouble so let's just talk about that really quickly because I think it's really important it's like to leverage it for to utilize it as Leverage is great but let's face it people go through swings in life you know like you got to be super disciplined and and be really self-aware of of your current set of circumstances right like because I just got done doing a video before you know we got on this one right and I was talking about the importance of saving before investing and talking about the cyclical nature of the world and the economy and everything right so when when things are going really well and you've got your income and the revenues coming in and whatever and you can utilize a credit card for leverage that's great I think where people run into problems and I think I'm saying this to make it so people avoid having this happen to them is when things start to kind of take that downward swing and your Revenue goes down and you can't afford as much you have to be really aware to not keep putting the amount of money on your card that you were putting on when times are good and and manage that cash flow because what happened and I've seen this like in all the coaching and the stuff that I've done with people is they're like things are great and then things weren't great and I'm like well you have all this credit card debt oh yeah it's because we're we're used to going out and putting four thousand dollars a month on our credit card and going to dinner then Johnny lost his job right and we just kept going out anyway I got news for you like the habits got to change you know what I mean like you've got to be like otherwise you're going to run into problems and I think it's it's easy to kind of like lose touch with that because you still have the card like right it feels different right and and emotionally we just kind of want to right that's the danger that's the danger that is the danger so just be very very aware of that yes you know what I mean like because that's huge so one last question before we go I've been it's been on the top of my mind since since you've been you brought it up credit score for your business um what did you say it was called again so dun and Bradstreet is paydex it's called the paydex score it's from zero to a hundred okay so that was my question so we're used to talking personal credit scores like anything between like 6 20 and up you can kind of get a mortgage anything above seven to seven twenty seven forty is like okay 740 760 and up is really good right like so I think most people are thinking about it in those terms like so can you explain the difference in how business credit works from a number perspective sure so uh so first done and bradstreets paydex score is zero to a hundred okay um Equifax it's called the intelli score and um that's from zero to 100 as well I'm sorry that's Experian Experian is the intelli score Equifax is a risk score that's what they call it and that's from zero it's tool there's two of them there's one from zero to a hundred and then one from zero to nine hundred right okay um but you just focus on the zero to 100 and ultimately you want your score on all three of them to be 90 and above right okay so your first round of building credit your pro if you do it properly you should hit around 80 to 90 and then as you continue to you know manage the debt you should hit 90 or higher okay what what determines that is going to be how fast you pay the bill so that's that's the thing about the business credit it's not even about paying it in full but it's how fast do you pay it right so I swipe the card on the charge card to pay for ads and then next day pay it off pay it off don't wait don't wait see with personal credit you could wait to the last minute got it you can even pay late and it's not going to affect your credit like right up to 30 days late yeah you're gonna have a late fee yeah yeah but it won't actually hit your credit with the business credit you're not gonna see like a ding like it doesn't say oh you're late or anything but what happens is just think of it like this every day that you don't pay you lose a point got it you got it so they reward you for fast prompt payment so if I'm doing that then let's okay let's let's break down give me a little personal coaching here okay so like I'm I'm spending 700 a day on ads right and I put it on this card do I send in 700 bucks a day to the charge card yeah you could do or you could just do like 400 a day to the charge card something like that and then do a lump um at the end of the month kind of right so you're because all you're showing is that you're you're on top of it you're paying it immediately so if you're doing that you're probably if you're doing it like daily like the next day you're gonna end up with like a 98.99 score because you're literally like there's no delay right um now the the thing to also note is if it is a net 30 account or a net 60 or net 90. uh you have to make sure you pay the invoice on the account okay okay so depending on especially when you're building credit when you're first starting some of the accounts you're going to set up are going to be accounts with stores or with vendors okay so they'll give you and that that vendor sells stuff maybe office supplies or this vendor sell you know sells um gas even there's gas cards too yeah um so you when you process that payment if you just go pay it but you don't pay the invoice they're not going to report that transaction to the bureau you have to wait for the invoice and especially when you first start it might take a day or two or three for the invoice to come and I had a client once even though I told him exactly what I'm telling you he I you know a month later his score was like a 50 and he's like why I was like well you paid it like 40 days late he's like well the invoice didn't come in the mail to 30 days later I said but I told you to pay the next day he was like well I didn't see it so I figured I'd just wait for it to come no no no you have to be proactive you got to call the company and say hey I don't see the invoice help me out here I want to pay it right away and then they'll help you to do it don't sit back and just treat it nonchalantly it does require more intention and more just you know staying on top of that but it's worth it in the end if yeah you can do that it's so worth it for sure and and I mean at the end of the day like you build the company big enough you hire somebody that can help manage that side of things for you yeah yeah and another thing you do is you can use some of these spending accounts as the account to pay your other accounts so this is one of the strategies in building business credit I have I have you set up an account a spending account which it reports to the bureaus right and then now you have a net 30 term on this account you use this account to pay your other business credit accounts last thing I want to say is also you want to look at all of your utilities um as a new business owner um or even as an established business owner look around in your business in your personal life what can you transfer to the business got it can you make that light bill a business expense call the like phone call the light uh electric company right um if you have a gas bill can you make that a business expense if you have anything that you pay right now if there is a way to transfer that to the business make it a business expense do that right now they might not report it to the business credit bureaus but there is a business credit service called e-credible okay and what they do first you pay them like ten dollars a month as a membership and they report that to Dun and Bradstreet just your membership but then they search public records for any utilities it could be a phone bill light bill any of these things we're talking about like your cell phone bill for instance cell phone because that might not that's not going to report but if it's in the business name they're going to detect it and they're going to report it to Equifax got it which is very helpful because there's not a lot that reports to Equifax um so that's another thing you can do I had a client tell me well I don't know I don't I don't have you know much I told them you know go look at the light look at the phone look it came back two three months later he had six accounts reporting to Equifax that he didn't think he could but again it just took a little bit of brainstorming to yeah you know and now those are business expenses which are additional tax write-offs to the business that's amazing well man that's a lot to chew on so I think uh we gave a ton of value in this if anybody is watching this and they have any questions about anything to do with business credit I know you have some master classes and stuff like that so um what I'll what I'll do guys is I'll get the links from Sebastian if you want to go deeper down this rabbit hole and uh and learn how to do everything he's talking about I'll I'm going to share the links down below for all of his different content um I'm gonna put the link to his YouTube channel if you if you want to get more content about this kind of stuff um and is there anything else I'm missing um no just just wanna I guess just uh just touch on I guess just overall business financing okay yeah oh yeah yeah yeah yeah and just just um kind of mention you know there's a lot of funding options out there and even even with what's going on you know in in the economy um the the banks are right now they're trying to save the day so there's there's incentives uh the SBA has um waived all of their fees to the banks for SBA Loans right so um you know the banks are they're trying to incentify the banks to get money out there to business owners because if if they can do that it's it's us it's it's us small business owners that you know are really the backbone of society of of of our whole economy so yeah we if we can you know get financing for our businesses to grow the business to hire more employees create more jobs this is what it's all about and so right now this fun there is funding of available I know like for example in the real estate space a lot of mortgage lenders are freaking out and people in the real estate industry are freaking out but right now in the business finance space I have to say it's very exciting because the banks are putting money out there they want to lend so unless there's another shutdown yeah yeah yeah I don't think the banks are going to stop lending to businesses to businesses but and and guys just so you know like Sebastian is a wealth of knowledge as you've seen in this with all that stuff like I said he's he's the Director of Finance with orange-fi which does the business lending stuff he's got the business credit 101 stuff and he's so no matter I would say no matter where you are on the spectrum of like business owner looking to get any of this done for yourself I would reach out to them and and connect with them and learn more from him and I'll put all the links to do that down below so and if you have any comments questions or whatever and you just kind of want to put them in the comment section go ahead I check them all the time I'll let Sebastian know uh and he'll probably check them all the time as well um just to see if there's anything relevant to respond to um and that's it so make sure if you haven't already subscribe hit the Bell that way you're notified every time we launch a new video go check out Sebastian's Channel subscribe follow him as well and uh that's it man hey thanks so much for being here this is so much fun thank you thanks for having me I want an interview for a long time so I'm glad we finally got this in so guys have a blessed inspirational day we will see you on the next video take care
2022-11-15 14:59
