Your business credit score is critical
Balboa Capital, a leading independent financing company that specializes in equipment leasing and small business loans, announced the results of its mid-2014 small business survey that was sent to over 450,000 small business owners and more than 35,000 equipment dealers throughout the United States. The July survey reveals that concerns about the US economy have decreased and that small business owners and equipment dealers plan to invest in their operations during Q3 and Q4.
That’s great news, but what are these companies doing to help or hurt their credit score so they can actually make those investments?
Balboa Capital has offered the following commentary, outlining the five common myths they say could be affecting your business credit score:
Not everyone understand how business credit works
As we all know, a good credit score is one of the most important aspects of financial stability. Lenders, landlords, insurers, and utility companies all examine this rating; therefore, failing to maintain a good credit score could put a strain on one’s financials. With so many misconceptions surrounding what helps or hurts a credit score, it can be difficult to separate fact from myth.
Even the most well-informed consumers do not fully understand how credit scores work and may still believe in some of the most common myths about them. The following guide will help clear up some of these credit score myths and provide tips to keeping your score in the best shape possible.
Myth 1: Checking your credit hurts your credit score
One of the most common beliefs about credit scores is that checking your own credit will lower your credit score. Fortunately, requesting a copy of your own credit report will not have an effect on your credit score. Your credit score is only impacted when the credit check is made for credit cards or loans.
This myth can be very dangerous to your credit score as it discourages you from monitoring your credit report. It is important to review your credit report periodically to identify and address any inaccuracies. Keeping an eye on your credit report will allow you to confirm that your payment performance is accurate and will enable you to remove any accounts that are falsely reported. Errors on your credit report can put a damper on your credit score and impact how lenders evaluate your credit worthiness.
Myth 2: Paying your bills on time is all that’s necessary to keep a good credit score
Many consumers believe that all they must do to keep a strong FICO score is pay their bills on time, but there is more to a good credit score than just a good payment history. Paying your bills on time accounts for just 35% of your credit score. The other 65% is comprised of the amount owed (30%), length of credit history (15%), new credit (10%) and type of credit (10%). It is important to take all of these components into account when reviewing your credit profile.
It is also important to note that your credit score is impacted by both positive and negative information on your credit profile. Late payments will have a negative effect on your score; however, if you improve your payment habits and consistently pay on time, you may see an increase in your credit score.
Myth 3: Lowing your credit limits helps your credit score
Asking your lenders for lower limits does not necessarily improve your credit score. In fact, maintaining substantial credit limits can actually help your score so long as you do not run up the debt to the maximum limit. When reviewing your credit profile, most lenders look for a fairly wide gap between the limit available and the actual amount of credit you are using.
As you know, your FICO score is based on a number of calculations. How much debt you owe makes up 30% of your score and can be calculated using your debt-to-available credit ratio. Debt is how much money you owe on all your credit cards, and the available credit is the sum of all the credit lines that are open. The lower your debt-to-available credit ratio the better your score. Therefore, if you reduce your credit limits but maintain the same debt, your debt-to-credit ratio will increase and can reflect negatively on your credit score.
For example, if you have $3,000 debt on your credit card with a limit of $10,000, you’re debt-to-available credit ratio is 30%. If you were to lower your credit limit to $7,500, you’re debt-to-available credit ratio
Myth 4: Closing a credit account can help your credit score
Closing credit cards does not help your credit rating. In fact, when you close an account your credit score may take a hit. Because the length of your credit history makes up roughly 15% of your FICO score, closing a credit card with a long payment history could be detrimental to your score.
If you stop using one of your oldest credit cards over a period of time, the card issuer may stop reporting updates on the account to the credit bureaus or close the account altogether. Even if the account still appears on your credit report, this long-standing credit account will not positively impact your score as much as it would if it were actively being used. The longer your credit history, the better. So it may be good for your score to keep an older account open and use the card at least once a month.
If you feel you must close an account, it is better to close the most recently opened cards first. For example, if you recently opened up a credit card to receive a discount, this would be the account to consider closing first.
Myth 5: Opening many credit cards is good for my credit score
Very often, many consumers believe having several active credit cards help improve their FICO score. However, the truth behind this myth depends on a number of factors. Depending on your overall credit history, opening several credit card accounts can actually hurt your credit score. For instance, having several credit cards with either high balances or high credit limits can have a negative effect on your credit score.
Regardless of the number of credit cards you have, whether 5 or 25, maintaining high balances can hurt your FICO score. To lenders, having high balances on credit cards indicates you may be a higher risk and this can impact whether credit is extended to you. Furthermore, having high debt-to-credit ratios on your open credit accounts will not help your credit score either. Overall, opening too many credit cards only affects your credit score if you don’t handle them properly.
Under-representation of women in fintech: Let’s talk about it
(BUSINESS FINANCE) Representation of women in fintech remains scarce despite a prevalent population of interest. Why is this the case, and what can we do about it?
Women are 50% of the population – so why are there only 9 of us on the 2020 Forbes Fintech 50?
I’m personally shocked by how underrepresented women are in such a lucrative industry. By 2022, it’s predicted that fintech, or financial tech, will be worth $26.5 trillion, and we cannot afford to miss out.
And I’m serious when I say fintech is truly taking over. This includes payment processing, online and mobile banking, person-to-person payments (think Venmo or Cash App), financial software, to name a few. For some perspective, half of consumers use digital banking services as the primary way to manage their money. That’s a big deal.
So why does it matter that women are drastically underrepresented in leading roles at these companies?
- Women CEOs receive only 2.7% of all VC funding – that is astonishingly low, considering that the remaining 97.3% is secured by their male counterparts.
- While a study conducted by the Harvard Business Review on leadership skills found that women scored higher than men in 17 out of 19 categories (I could’ve told you that), women founders make up only 17% of fintech companies. Some of the categories tested on were:
- Bold leadership
- Taking initiative
- High integrity & honesty
- Collaboration and teamwork (this is a big one!)
- Inspiring & motivating others
If you’re a woman interested in business, tech, or entrepreneurship looking to break into the big leagues, here’s some exclusive advice from lady CEOs, founders, and COOs:
- Stay Passionate
Suneera Madhani, Founder + CEO of Fattmerchant, says: “…remember why you started and hold that close to your heart when times get tough.”
- Be Open to Learning
“Never behave as the smartest person in the room because you may miss some of the best ideas.” Says Snejina, Co-founder + CEO of Insurify.
- Trust Your Intuition
As the Founder + CEO of Tala, Shivani Siroya urges us to: “Stay excited, focused on results and be incredibly optimist. It’s okay to really believe in your gut – just make sure that you see the results with it.”
2021 is a new year full of opportunity – even though the odds are (and always have been) stacked against us, let’s have this be the year where women techies and business owners capitalize on their leadership skills. We have lost time – and profit – to account for.
Author’s Note: Thank you to CreditRepair for the linked infographic!
TikTok users are making bank by copying Congress peoples’ investments
(FINANCE) TikTok, the short-form video platform, has users trading stocks tips. The newest strategy: following Congress peoples’ stock moves.
TikTok isn’t just for funny dances, crude jokes, and kids born after the year 2000 (but crazy to think, they aren’t kids anymore, they could be 21…time flies). The short-form video platform that soared to be the #1 most downloaded app during the pandemic is giving tips to youngsters and millennials for their finances. The newest strategy: following and copying Congress’ stock moves.
“Invest together with your family, friends, and brilliant people all over the world. Get real-time notifications when others make trades and copy their moves.”
Nancy Pelosi and her husband, Paul, are the prime examples of government traders (or traitors, you decide) to watch. For example, Paul made $5.3 million through call options to buy 4,000 shares of Alphabet before the House Judiciary Committee voted on antitrust regulations. He also exercised $1.95 million worth of Microsoft stock just 2 weeks prior to the company’s awarded contract worth $22 billion for the use of their VR headsets in military training. Lastly, before President Joe Biden announced another incentive program for EV manufacturers, he also paid Tesla stock options for $1 million.
Christopher Johns, the cofounder of Iris, said that every trade “inevitably turned out to be such a long-term winner.” Wonder how that’s possible (eye roll). He adds, “if they’re the ones passing the laws, it’s probably smart to keep up and see what they’re buying.”
And yes, their stock picks are considered public trading activity and this is perfectly legal. Trading is no longer a lone man in a dark room behind 3 large computer screens of graphs or Jim Cramer screaming in the background- it’s a full-on social activity, just like everything else nowadays.
There is a whole community behind these meme cryptos, penny stocks, and short squeezes. You’ll find them on r/wallstreetbets, Elon Musk’s Twitter, Facebook groups, and of course, trading TikTok, all contributing to the “Eat the Rich” scheme of Gamestop/AMC, the elaborate rise and fall of Dogecoin, and the now trending, 2nd dog-specific coin, Shiba Inu.
Laugh all you want, but these kids are working smarter, not harder, and even outsmarting the best in the league, by following the best in the league.
Mastercard partners with Bakkt to offer crypto services to its vast network
(FINANCE) The thousands of banks and millions of merchants on the Mastercard network could soon integrate cryptocurrency in their products and purchases
Mastercard has announced a partnership set to change the financial industry forever.
The major payments network is teaming up with Bakkt, a crypto-focused firm spun off of Intercontinental Exchange, that would be the provider of custodial services for users that sign up. This means that the thousands of banks and millions of merchants on Mastercard’s network could soon integrate cryptocurrency in their products and purchases. Bitcoin wallets, cards that earn rewards in crypto, and loyalty programs like airline travel or hotel points that convert to bitcoin would be included. The benefit is that the rewards or points in the form of crypto will allow users to earn a yield. Bakkt CEO Gavin Michael said in an interview,
“It’s an easy way to get going because you’re not using cash, you’re putting something that’s an idle asset sitting on your balance sheet, and we’re allowing you to put it to work.”
With Mastercard being a dominant force in the global payments industry alongside Visa, and 2.8 billion Mastercards in use, the announcement could bring a noteworthy expansion to how Americans interact with bitcoin and other cryptocurrencies. Sherri Haymond, the executive vice president of digital partnerships says,
“Our partners, be they banks, fintechs, or merchants, can offer their customer the ability to buy, sell, and hold cryptocurrency through an integration with the Bakkt platform.”
The development of crypto, and bitcoin in particular, has dramatically increased in just the last year. Bitcoin has reached the record price of $60k this month and U.S. regulators have now allowed bitcoin-linked ETFs.
In a U.S. Consumer Crypto survey by Bakkt consisting of 2,000 consumers, 48% said that they purchased some form of crypto in the first half of 2021. 32% that had not yet purchased crypto reported that they were heavily interested in purchasing by EOY.
“We want to offer all of our partners the ability to more easily add crypto services to whatever it is they’re doing.”
And just announced, due to the popularity and interest in cryptocurrencies in the Asia Pacific, consumers and businesses there will have the ability to apply for crypto-linked Mastercard credit, debit, or prepaid cards allowing them to convert their crypto into traditional currency to use globally. Mastercard is partnering with Amber Group, Bitkub in Thailand, and CoinJar in Australia to offer this service. Be on the lookout for the rollout of these services in the States soon!
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