Tuesday, December 20, 2011

The Benefits of Good Credit

So as you know, I'm starting a new business. A new business, even a small one, has start-up costs. Not huge start-up costs, by any means--but, having spent all of our savings on school, and now being for the most part unemployed for the last several months (April's worked part time and I've made a little money doing contract work), we don't have money to start a business.

I figured I'd go to the bank and get a small business loan. Turns out banks don't like making business loans to new businesses, even just $4000 or so. Even if they did, the interest rate would be horrendous. But they don't. So that wasn't an option.

I hoped my parents would offer to lend me money, as they're not exactly struggling financially right now. So I hinted at it without asking outright. No luck, at least not initially.

Then I realized we kept on getting credit card offers for 0% APR for long periods of time (15 months, 21 months, etc.) We have great credit, so we get some nice credit card offers. I figure it's basically a loan, and if I can pay it off within the time limit, it's an extremely nice loan. So I applied for a couple of credit cards, including an American Express. I was expecting a $1,000 or maybe a $2,000 credit limit on each card, which is why I applied for two in the first place, but--we got the American Express today, and let's just say we'll probably use our American Express exclusively this year, both for personal and for business use. The credit limit is much, much higher than I expected. Our other credit cards (our faithful Discover and the backup Amazon Visa) will get very little use for the next 15 months. It's too bad we can't put our rent on the card...

The lesson? It pays to have good credit.


Brentwell said...

I've gone to a few seminars on starting businesses. They recommended to keep personal and business expenses separate. It is good to have good financial records of a business.

Katrina said...

It definitely does pay. And I wish we could have put our rent on our credit card too--and our mortgage now. Then we'd get even more rewards!