Credit card and credit score
Normally a credit card is very useful. These allow you to purchase products or services instantly and pay for them within a certain period of time. But what happens when you have a bad management of them or you use them for your business?
If you use your credit card to finance your business, you are probably paying a higher interest rate than a specialized financial institution for SMEs and businesses could offer. You must keep in mind that the main use of credit cards is personal. Otherwise, this can affect your credit score.
The credit score is the score you get according to the handling of your credits. The amount of money in credits you have obtained and the payments you make for them. All this information is detailed in your credit history.
How does its use intervene in the score?
The use you give and the way you organize payments for your credit card affect or benefit your credit score. Keep in mind that late or not pay, could generate a bad rating and close the doors with institutions to continue obtaining larger credits.
To improve it, you must be punctual in the established payments and not ask for credits that you do not really need. When you have a high credit score you have the benefit of being able to increase your line of credit.
If you have debts, the first thing you should do is try to pay them off little by little. And if you specifically used that money for your business, there is a possibility that they can acquire your debt and re-finance your SME properly. A greater benefit of this is that your debt is centralized in a single loan and with lower interest, so you only have to worry about one.
You can also organize yourself and not grow your credits until you can finish paying what you owe. It is important that you be aware of the payment capacity you have and thus help improve your rating.
Another tip, is that if you are still starting to know more about finances, the ideal is that you have the minimum number of credit cards. Learn to manage your money and stay stable with a good credit score.
How you can realize the use you give to the credit card implies responsibility and better decision making. Above all, you should look at what they offer you; like the CAT or extra benefits, better rates, lower commissions, etc.
Your business needs adaptive loans designed for growth. You should know that these exist and are totally different from what a credit card can offer you.