Oct 27 • Business Credit
Why is Comparable Credit Important?
Good and Even Great Credit Scores May Not Be Enough
Even if you have great credit scores, both personal and business, you still want to make sure you “build those credit files out”. What do I mean by this?
An often-overlooked aspect of obtaining cash credit lines is something called “Comparable Credit”.
As I said you can have great personal credit scores and great business credit scores but when seeking larger cash credit lines comparable credit comes into play.
If you and/or business has credit lines of $500, $2500, $5,000 etc. and you are asking for $35,000+ you most likely won’t get that. Banks routinely provide you 1.5X to 3X your current personal limit in business credit lines if your file look good.
So before going after the truly larger business credit lines, make sure your personal credit files have a few larger credit lines already reporting. Ask your vendors and credit card companies to increase your credit lines every 6-months or so as long as you are using them and paying them in a timely fashion.
This is how you take $500 vendor lines and $5,000 personal credit card lines and make them $1,500 and $15,000 credit lines. Banks want to see you have handled those larger credit lines successfully before extending your business super-sized credit lines of $35K+.
If you have successfully had large credit lines and paid aggressively, they are more than happy to grant you these larger credit lines. But first they want to see you or your business has had a history of making payments on time with larger credit lines.
It takes time to do this right. But it’s worth it and frankly the only legit way to do so. Build out your personal credit file and business credit file before seeking that homerun credit line.
Always be increasing your credit lines whether you need it now or not. One day you may!
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Why is Comparable Credit Important?
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