I'll let you in on a secret: a successful credit stacker will build relationships with the right banks.
What does any of that mean?
Don’t make these rookie mistakes
Not every bank can set you up for success. It helps to do your homework to know which bank is the best bank to partner with early so you can develop a long-term relationship with them.
Credit Stacking is the process of strategically building lines of credit to get higher utilization – or spending limits – and using that credit to fund your business with 0% interest.
When I got approved for a business credit card with a $50k spending limit and 0% interest, I thought I had made it. That card helped me to scale my business and make money faster.
I didn't need a loan from the bank or a rich relative. This method of business funding also kept me immune from drowning in high interest rates.
Unfortunately, as an entrepreneur trying to get things going, I made a lot of mistakes. I wish I could say the business credit card was my first move. It took me a little more than a year to figure that out. Now that I know what I know, I want to share it with other entrepreneurs so they avoid the mistakes I made.
Some "rookie mistakes" I see people make can have consequences that can potentially lead to your business going under. Learn from my mistakes and maximize the funding for your next big idea.
Invest your relationships with the right banks
The simple solution to this is doing your research. Find out what the banks offer with their credit cards and if they fit your goals.
There are some cards I don't even bother with because they don't have the benefits needed for effective credit stacking, like 0% interest or a decent points system.
In my Credit Stacking mentorship, I always recommend people start with Chase bank. I personally love Chase cards. They have the best reward programs for both personal and business credit and are the easiest to get high utilizations early on in your credit journey.
Planning your credit journey
To get a high utilization on your business credit card, – which is where you get the money to fund your business – you need to have experience with your personal cards.
Sometimes when people try to apply for business credit, they use a retail credit card like Old Navy or America Eagle. I can promise you, this will not get you far.
Having multiple lines of credit and a relationship with one or more of the major banks is something I recommend in my mentorship. As I mentioned before, start with Chase bank.
If you don't have any credit cards in your name, see if you can become an authorized user on a relative's card so you have a bit of a boost when getting started.
If you need more confidence in your credit score, that's OK, we can help you improve that so you can make the steps to become more qualified for a business credit card.
Take responsibility for your credit journey
Whether you start after reading this blog, or a week from now, make sure you're being responsible. Missing payments on your credit cards can almost always kill your chances of getting approved for a high-utilization credit card.
Setting up auto-pay can and will be a lifesaver for you as you open more and more lines of credit.
Be sure to also spend within your means. Just because you have a $50K credit card doesn't mean you can spend it all and forget about it.
Take the money you earn from your business and pay off your cards quickly. Don't become an ironic case where you go broke while trying to get rich!
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