How business debt can have a negative impact

How business debt can have a negative impact on your personal credit score

Lesson Details:
April 27, 2020

Video Transcription: So most people they don't realize but your business can affect your business loans and that can affect your personal credit scores can you talk a little bit about that because I don't think people really know that this video is brought to you by a Appy Pie’s Academy in fact I didn't know that before fair enough I mean most people aren't credit score experts but there is that idea of all of the personal guarantees that come along with the business so depending on how you funded your business and how you continue to run your business let's say you have a line of credit and let's say that line of credit is personally guaranteed by you let's say you have a credit card and let's say you're using it for the business but it's really your credit card that's the one that I see most often so it's a business credit card from the standpoint of for tax purposes you use it that way for accounting purposes it's over here on the business side but really when that card was issued it was issued to you well that card was issued to you you're gonna start to see it on your personal credit score now if you have it this is kind of an interesting anomaly if you have a business card that you've gone and applied and you're Bob's Crab Shack and you've gone and applied for a business credit card it's gonna have a personal guarantee almost every single time but because it's a business credit card and it started as a business credit card it generally will not report on your credit report which depending on how you're doing with it is a good is a good or bad thing you know if I have a credit card you know a lot of times I want it to report because I want that good credit juice that's coming from you know the fact that I'm making payments on time but those business credit cards tend to not report until you default so if you have a visit yeah you know this the system is not made for the little man so if you have that business credit card and you've defaulted if it's never reported before all of a sudden now you're gonna see it you're gonna start to see that on your personal credit report because its first thing guaranteed so they're allowed to report it so that's how you're gonna gonna see the things that are going on in your business affect your personal your personal credit and for a lot of people what they've done is they've been using their personal credit to fund their business and so sometimes they'll see their personal credit store drop because they have so much outstanding credit so one of the elements of a credit score is how much how much you're allowed to have in credit and how much you're actually using so you know if people to extend to you $100,000 to the credit and you're only using $20,000 worth of it that's good for the algorithm but if it's ended you 100 and years using 99 they hate that honey so that'll start to drop your credit score so if you're funding your business that way you might see a screw-up in your personal spread credit score as well.

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