5 Ways Improving Your Credit Score Can Help Your Business

On an individual level, having a good credit score typically translates to lower interest rates on credit cards, mortgage loans and auto loans. This translates to a financial savings, especially when it comes to long-term loans like auto and home loans. The same is true when it comes to your business – good credit can be the lifeline to building a great company all while helping out your bottom line. Here’s a closer look at how having a good credit score can behoove your business:

5 Ways A Great Credit Score Helps Your Business


If your credit score isn’t up to snuff, here’s a look at why taking the credit repair steps to improve it can prove to be so valuable for your business:

1. Lower interest rates: Just as a higher score gets you lower interest rates on auto and home loans, it can get you lower interest rates on business loans as well. Improve your score today by making on time payments and keeping your credit utilization ratio at or under 30 percent.

2. Fast approval: When it comes to running a business, you usually can’t wait long periods of time for loans to be approved and funding to come through – you need it immediately to stay solvent. Good credit ensures faster approval compared to having shaky credit.

3. More options: In addition to fast loan approval and low interest rates, a good credit score will also mean you’ll have more borrowing options.

4. Groundwork for the future: It’s one thing to make on time payments and build positive credit history with a lender. It’s another thing to continue to build your credit score in other ways throughout the duration of the loan, something that can leave lenders with a very positive impression of your consumer behavior and overall operations. This goodwill can pay big dividends in the future when lenders recognize how reliable of a consumer you are. There’s a good chance that they won’t think twice when it comes to improving future loan applications.

5. Competitive advantage: We’ve already established how a good credit score can save you money on interest rates. And this money that is saved on financing can be utilized in a number of ways. For instance, you can pass the savings on to your customers to offer a less expensive product than your competitors. Or you could keep prices steady and improve your profit margins to expand and grow your company. That’s a choice for you to make, but it all starts with good business credit. If it’s not in good shape, make the steps to start improving it today.

Business Credit Score

Business Credit – How Does it Work?

How does business credit work

If you’re a start-up company, chances are you’re going to be falling back a lot on your personal credit in the early days of your operations. And while that’s perfectly normal, your goal as a business owner shouldn’t be just to grow your business over time but to grow it in a way that you can also build business credit.

What is it though? It’s similar to your personal credit score, except from a business perspective. For instance, while your personal credit score is important, your business score should be kept separate in order to increase your company’s financing ability and credit capacity. This helps a business acquire the likes of equipment, office space, loans and financing and anything else that is pertinent to current and future operations. And it’s important to build business credit because starting a business can be a real struggle at times, potentially exhausting any personal credit options. By building a good business FICO score, you’ve now got another avenue to draw from.


We already mentioned how it works very similarly to personal credit. So in order to build it, you’ll have to borrow money, repay the borrowed money responsibly and make sure that the payments are reported to a credit reporting bureau. But just like your personal credit, your business score isn’t something that’s built overnight. In fact, just like your personal score, one of the key factors that lenders often look at when analyzing what type of a borrower you are is the length of your credit history. That’s why it’s important to begin to establish business credit immediately after you start your company.

As a reminder, your business credit is not the same thing as personal credit, so don’t treat them the same way. Apply for business credit under a Tax Identification Number, not your personal social security number, and make sure you’re meeting all the federal and state guidelines for operating a business within a given area. One other thing that can help your business score is incorporating your business. Incorporating helps limit personal risk, which can make you a more qualified borrower and increase your credit score. It’s not uncommon for many businesses to incorporate as part of a credit repair plan.


There are three big benefits of business credit: a big credit capacity, to increase company value and to protect your personal credit. Here’s a closer look at these three key benefits:

  • Large credit capacity: It’s estimated that successful businesses can have up to 100 times more of a credit limit than a personal credit score. This alone gives a company a lot of latitude to pursue new ventures and increase revenue within the business.
  • Increase company value: The better the credit score, the more attractive a company becomes, not only in terms of increased revenue but in terms of how it looks to potential investors and potential buyers.
  • Protect personal credit: As previously noted, being able to rely solely on your business credit for company matters helps protect your personal credit score, keeping the two entities separate. It’s not uncommon for new businesses to rely on one’s personal credit in the early days until an adequate enough amount of business credit can be built, but ideally, there’s a separation of church and state between a personal credit score and the business part. It’s best for business owners and the business.

Tips-Build Business Credit.

So now that you know a little bit about business credit and why it’s important to build it, just how can you go about doing it? Here’s a look at some tips and pointers for getting your business credit score up:

  • Start a business bank account: One of the first things you should do as a new business is open up a bank account. Banks report to the credit bureaus, so it helps start a line of credit. And opening up a business account will help you keep business and personal matters separate.
  • Don’t let your personal credit score slip: Business and personal credit scores are not the same, but you still shouldn’t let your personal credit score slip. That’s because in the early days of your company when your credit is still being built, it’s likely that you’ll be viewed as more of a high-risk borrower when applying for loans. Because of this, it’s not uncommon for the bank to grant the loan and rest liability with the owner on a personal basis. In order for a bank or lender to do this, the personal credit score needs to be adequate. So it’s important not to give up on the personal credit score, as in such cases it’s important to also build your credit for your business.
  • Be responsible: Responsibility is the key to building good credit. Make sure all bills are paid on time; monitor your credit score as you begin to grow it; and even consider consulting with a credit expert to help you and your business in the early days.

15 or 30 Year Mortgage? – Mortgage Advice

As you move on with home purchase plans, you will discover that you have a wealth of choices when it comes to mortgages. Big bank or mortgage broker? Traditional or FHA? And finally, fifteen year or 30 year mortgage? Each has their advantages, and which will work for you will all depend on your personal financial situation.

Money Out of Pocket

A 15 year loan will mean a monthly payment that is hundreds of dollars higher than the one for a 30 year loan. But, you pay less over the life of the loan since the interest rate is lower and the term far shorter. Seems like an easy trade-off, right?

However, there is an opportunity cost that comes with those savings. A mortgage payment that high can prevent you from investing as much in other areas, such as putting money away for a child’s education or funding your retirement.

Also, depending on the interest rate on your loan, you could get a far better return on your money by investing than by paying off your mortgage as quickly as possible. Say, for instance, that you have a 3.5% mortgage rate. Historically, the stock market has grown an average of 10% a year. If a homeowner were to put those few hundred a month extra that a 15 year mortgage costs into investments instead, he or she could come out tens of thousands of dollars ahead by the time a 30 year mortgage was paid off.


Thirty year mortgages offer far more flexibility than 15 year loans. A 30 year loan gives you the freedom to pay it off faster, if you choose, by adding extra payments. If you have a life event such as an illness or job loss that make the higher payments unfeasible, you can simply return to your regular loan payment schedule.

With a 15 year loan, you are committed to higher payments every month. You could, theoretically, refinance the loan if you fall on hard times. But, the sorts of issues that would cause someone to need a lower mortgage payment, such as unemployment, or being financially over-extended, are red flags to lenders, and could prevent you from getting a new loan.

Interest Rate

Typically, you will find much lower interest rates on 15 year mortgages than on 30 year loans. This means that, even if you were to make extra payments on a 30 year loan, you will still spend thousands of dollars more over the life of the loan.

We advise those who are shopping for a mortgage to run many different scenarios to determine which loan is best for their needs. Do not just calculate the difference between payments on a 15 and 30 year loan. Consider your total discretionary income, and whether you have adequately prepared for college tuition and retirement. By taking your entire financial future into account when you are choosing a home loan, you can continue the healthy growth that started with the credit repair process.

For more information on how prepare your credit for a refinance or home purchase click here to request a free consultation.

Sinking in debt? – Pros and Cons behind debt management

People call into our office every day with the following questions:

“Nik. Should I file for bankruptcy? Should I look into consumer credit counseling? Should I consolidate my debt? What should I do?????? Aaaarrrgghhhhh”

Well, let’s start by defining each of the options available. There are pros and cons to each scenario and that is why dealing with a neutral company to assess your scenario is always your best bet. Key Credit repair is a “Credit Repair” company. This should not be mistaken-ed for a debt solutions company. When our clients ask us what to do with their debt we are able to assess their options better than a lawyer, debt settlement agent or credit counselor because we do not stand to gain financially from dealing with our clients debt problems. In fact, most of the debt solutions and advise we give is 100% free of charge. Anyway, here are the options…..

#1 Bankruptcy: There are two main types of bankruptcies for consumers. The first of which is a Chapter 7( we’re only talking about this options. I think chapter 13 is almost never an option)

Pros: A chapter 7 bankruptcy allows a consumer to wipe away all of their debt without paying back anyone. Also, in many cases you are able to keep your home, car and personal belongings. It can be an absolute savior in terms of getting out from under the harassing phone calls and possible law suits and wage garnishments from creditors. It’s a nice, quick “clean slate” if done correctly.

Cons: A bankruptcy filing is a 10 year mark on your credit report. bankruptcy doesn’t necessarily clear away all of your debt. Certain federally backed student loans cannot be included.

#2: Debt Consolidation: A consolidation should not be mistaken for a debt settlement or debt relief program. A “True” debt consolidation is taking out new loan and using the proceeds of that loan to pay off your existing debt.

Pros: These loans have provided major savings to consumers in the past. While credit car rates can hover around 30% Apr most installment loans used to consolidate debt are well below 10%. This can create considerable savings. Also, the payments on these loans are usually fully amortized. This means that your payment each month is not just going to interest but to principal as well. This allows you to see your balance drop each and every month.

Cons: These loans are almost completely obsolete. Unless you already have a great credit score (probably not because of your debt load) or belong to a credit union through your employer they are very hard to get (with the exception of student loan debt. Call me:).

#3: Consumer Credit Counseling: Most of the companies that offer consumer credit counseling are non-profit organizations (This doesn’t mean that the CEO’s aren’t making a million bucks and the people you are talking to aren’t commissioned employees. Not for profit is too loosely used these days). With these programs the consumer credit counseling agency will negotiate with each of your creditors for a lower interest rate. For a monthly fee (typically around $40) they will have you make a one time payment per month to them that will be distributed to all of your creditors until you are debt free.

Cons: While you are in a consumer credit counseling program you will not be able to use your cards. This is probably a good thing but for many consumers this can be a pretty big turn off. Also, each of the creditors that have been placed in a counseling program will place a mark on your credit report indicating that your debt is being managed by a third-party. Although this comment is credit score neutral most banks and lenders will not lend to you while in one of these program.

#4: Debt Settlement/Relief program: A debt settlement is a great bankruptcy alternative. In one of these programs a consultant will usually work with you to find out how much money you can budget each month into a dedicated savings account to be used to pay off your creditors. As you accumulate money in your savings account the debt settlement company will use those funds to pay off your debt at a reduced balance. This is a great tool to get out of debt at a pretty large discount. Many of the collection agencies that are purchasing the debts from your credit card companies are willing to settle for 20-50 cents on the dollar. Also, the Federal Trade Commission does not allow debt settlement companies to make fees until they have negotiated your settlement so that guarantees that you will not be charged anything up front.

Cons: Many time companies will not make it clear that they will not be making payments to your creditors until you have accumulated enough savings for a settlement. Also, if your debts are currently up to date you will end up seeing a significant credit score drop. These programs are designed primarily as a bankruptcy alternative.

#5: Do nothing: Yes, I’ve said it. “DO NOTHING”.
Pros: As time passes you will get closer and closer to your states statute of limitations for the collection of a debt. For example, here in Massachusetts you can refuse to pay on a debt 6 years after the date of last activity. Some states have statutes as low as 2 years. This is all pending that they haven’t sued you because judgement can be held over your head for 10 years.

Cons: Hhhhmmmm. Karma? Also, your credit report will still carry these debts for 7 years. Your refusal to pay does not necessarily remove the negative record because of their in ability to collect the debt from you.

Feel free to reach out to myself or any of my team members with your questions about how to approach debt. We can be reached at 617-265-7900. Also, please forward this to anyone that needs a “real” take on how to deal with debt.