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business credit

6 mins read

Herman Dolce, Jr. on Using Business Credit to Grow Your Business and Build Wealth

Herman Dolce Jr. is the founder and chairman of Bella Sloan Enterprises, a financial education company focused on helping entrepreneurs and small business owners understand and utilize the power of business credit to secure funding for their ventures.

He created the Bella Sloan Academy to teach the strategies and techniques he used to build his businesses. In this interview, Herman shares some of these strategies and explains how others can use business credit to take their companies to the next level.

Herman Dolce
Herman Dolce Jr.

What inspired you to start Bella Sloan Enterprises?

The reason why I started this company was because I was searching for freedom. I came to the realization that working for someone else was not going to give me the freedom and opportunity that I needed and desired to reach my goals. In addition to that I wanted to leave something for my children that was more legacy based.

I remember needing permission to go on a babymoon with my wife after she was pregnant with our firstborn. When I came back from the vacation I did not have any more paid time off to actually be with my daughter. That was the main motivator that helped me start my company.

What is business credit used for?

The main use for business credit is to leverage that credit in order to grow and expand your business. Leveraging cheap 0% interest business credit cards go a long way for many startups who cannot afford the interest payments when they are first starting out their business.

Business funding is like gasoline on your business that helps you expand very quickly. You can use this money for buying inventory, advertising, or even rent payments.

Why do you think now is the time to learn about business credit?

It has always been the time. Because this information was kept away from us for so long, we are definitely at a disadvantage. It is important that everybody understands that taking out (good) debt that’s in your personal name is crucial the being able to grow your business and get more funding.

What are some of the biggest misconceptions about business credit?

Some of the biggest misconceptions about being able to get business credit are that you need to have a good credit score or your business needs to be about two years old. While it is best practice for those to be in place, you are still able to get business credit only using your business EIN and if your business is under 2 years old.

There are many lenders that will give you funding if your business is 6 months old and will give it to your business just based on your business credit score which is not connected to your personal credit score.

What are the main steps involved with using business credit to get funding for a business?

The main step in getting funding for your business is first of all setting up your business entity. Whether it is an LLC, s-corp, or c-corp, just getting the entities is the first step. Secondly, it’s to set up your business properly to ensure you get the maximum amount of funding.

Such as having a proper business address, website, business phone number, and a proper business email. Finally opening up a business checking account. Setting yourself up as a legitimate business does volumes to help you get funding from many different vendors.

What is one of the biggest wealth creation strategies you’ve learned as an entrepreneur?

One of the most amazing wealth creation strategies that I have utilized in my line of work is using cheap money to make cash flow happen. For example, I would liquidate a business credit card at 0% interest and invest in commodities that give me five to 10% interest on my money.

Since I am already utilizing 0% interest money all of it is profit. Once the 0% interest runs out on these introductory rates for these business credit cards, I pay off the principal and then get another business credit card at 0% interest and repeat the process.

What are your future plans for Bella Sloan Enterprises?

The future plans for this company are to bring financial literacy to high school and college. In the first seven years of this company, we have spent the majority of our time teaching adults about wealth, and financial freedom strategies. The earlier we teach this information the better it is for all generations.

What advice do you have for other entrepreneurs?

The best advice I can give to all entrepreneurs is to continue to be consistent and disciplined. When motivation runs out discipline must take over.

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4 mins read

Do You Know The Two Types of Credit Scoring Models?

If you’re just beginning to track your credit score regularly, you can be confused about where to start. Which credit score should you check? Your FICO Score or VantageScore? Is tracking one of them sufficient, or should you monitor both? How are these models of credit scoring different?

This article explains and breaks down the differences between these credit scoring models. Keep reading to know more!

What Is a Credit Score?

A credit score is a three-digit number that represents a borrower’s creditworthiness. It’s determined based on your credit history, including your open accounts, the total amount of outstanding debt, credit repayment history, and other such factors.

Credit scoring models use a 300-850 point credit scoring scale, with each credit score falling within a specific range. Your scores influence a lender’s decision to offer you credit. They help lenders understand how you’ve used credit in the past and how you’re likely to use credit in the future. The higher your score, the better you look to potential lenders.

What Are the Main Credit Scoring Models?

Although there are different types of credit scores, most of them fall under two main credit scoring models: FICO and VantageScore. Both your FICO Score and your VantageScore measure your financial stability and how likely you are to repay your debt. However, there are a few minor differences between them. Keep reading to know more!

FICO Model

The Fair Isaac Corporation first developed the FICO credit score in 1989. Over 90% of top lenders use FICO scores to make lending decisions. FICO regularly updates its credit scoring models to accommodate changes in the industry and provides a more nuanced perspective of a borrower’s creditworthiness

FICO uses the following ranges to determine your credit rating:

  • Exceptional: 800-850
  • Very Good: 740-799
  • Good: 670-739
  • Fair: 580-669
  • Poor: 300-579

According to FICO, a score between 670 and 739 is considered good, and it can help you secure lower interest rates from your lenders.

Five factors determine your FICO score, and each of these factors carries a different weightage. They are as follows:

  • Payment history, which measures your on-time payments. (35%)
  • Amounts owed are the debt you’re carrying relative to your credit limits. (30%)
  • Length of credit history measures how long you’ve been handling credit. (15%)
  • New credit measures how often you apply for new credit. (10%)
  • Credit mix measures how you handle different types of credit, such as credit cards and loans. (10%)

VantageScore Model

In 2006, three major credit bureaus, Equifax, Experian, and TransUnion, in collaboration, created the VantageScore credit score model. The VantageScore model uses many of the same factors as the FICO credit score model to determine your credit score. However, it weighs these factors differently.

In the FICO model, your payment history is the most significant factor affecting your credit score. However, in the VantageScore Model, your credit utilization ratio is the most influential factor in credit scoring.

The VantageScore credit score ranges are as follows:

  • Excellent: 781-850
  • Good: 661-780
  • Fair: 601-660
  • Poor: 500-600
  • Very Poor: 300-499

The VantageScore model uses the following factors to calculate your credit score:

  • Total credit usage, balance, and available credit (Extremely Influential)
  • Credit mix and experience (Highly Influential)
  • Payment history (Moderately Influential)
  • Age of credit history (Less Influential)
  • New accounts (Less Influential)

If you have further questions about calculating your score and which model to follow, get in touch with a credit bureau.

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4 mins read

5 Ways to Build Business Credit

Building business credit can help your company in a variety of ways. It can make obtaining specific types of financing, business insurance, or payment terms with suppliers easier or less expensive. It may even assist your company in acquiring lucrative business contracts.

Business Credit

In this article, we’ll go over how to build business credit in order to help your company grow.

1. Open a Business Bank Account

You should open a business bank account as soon as possible in order to establish business credit. A business bank account allows you to keep your personal and business finances separate. You’ll also be able to apply for business loans, merchant cash advances, and alternative lending products.

Your business credit score will increase if you use your business account to pay for business expenses such as utilities, commercial rent, and employee payroll. Strong business credit history will affect your business credit score positively if you use a dedicated bank account for your business finances and make on-time payments.

2. Get a Business Credit Card

Another way to keep your business and personal finances separate is to apply for a business credit card that is only for business-related purchases. This allows you to build your business credit score without dipping into your personal credit balance and negatively impacting your personal credit score. Purchase items for your business location, such as marketing materials or furniture, with a business credit card.

3. Set up Trade Lines with Suppliers

Establish trade lines (i.e. lines of credit) with your suppliers. Even if you start with low credit limits, developing these lines will allow you to build your business credit while also providing documented proof of your payment history.

Create trade lines with suppliers with whom you frequently rent equipment or purchase inventory. These trade lines require regular payments, which will improve your business credit score if you make payments on time. When you are successful with a few initial suppliers, you’ll have positive credit references to build upon with future suppliers.

4. Pay on Time or Early

Creating trade lines is only useful if you can pay on time. Make sure you have the procedures in place to pay your lenders and suppliers on time. Payments that are even just a few days late can damage your business credit report and lower your credit score. If you’re worried about meeting payment deadlines, identify any cash flow gaps that could affect your business.

5. Keep Track of Your Business Credit Score

Monitoring your business credit score is the best way to understand your business credit. You can do this by reviewing your TransUnion or Equifax business credit report. When you review your business credit report, you will be able to identify specific issues causing your score to fall, such as missed payments, outstanding balances, credit utilization, and current lawsuits on your profile. Knowing the exact details of your business credit report gives you specific items you can work on to improve your score.

Now that you know how important business credit is, you can take the necessary steps to improve it.

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