Your Credit And Refinance Loans

Do you run a small or part-time business? Could your credit activities associated with the business affect your chances for a refinance loan? Depending on your history of reliable payments and other best practices for credit, the answer could be yes.

Inc. Magazine once ran an article about credit card debt and small business titled, “The Credit Card Mistake That Could Destroy Your Company”. According to the article, “It’s easy to reach for plastic. More than 180 million people in the United States have credit cards, including 80 percent of the small business community.”

But the article reminds that a corporate or business credit card isn’t always the right choice for a small business owner. 

“Using credit cards can sometimes put both your company and your personal finances in jeopardy...there are a few things you should know about business credit cards”.

Paypal offers credit cards that could technically be used for small business--who doesn’t love the convenience of buying and selling online using Paypal? But it could be a major blunder to assume all credit cards are created equal. They are not, and they also may not have the same types of consumer protection built into consumer credit cards.

“Contrary to popular belief, small business credit cards do not shield business owners from personal liability. Every major credit card issuer holds both the company and the small business owner as an individual liable for the debt.”

Never assume your business credit and personal credit are separate entities-when you apply for a refinance loan both types of credit may get scrutinized.

“The major credit card companies pull applicants' personal credit reports when making approval decisions for business credit cards. In fact, your personal credit standing has more of an impact on your ability to land a business credit card than that of your company.” That can also apply when a borrower applies for the refinance loan--your business debt could be a factor in your debt-to-income ratio, and that can really change the game when applying for certain types of home loan refinancing.

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