Black Entrepreneur Blueprint 624 - Jay Jones - The Hidden Cost Of Bad Credit For Entrepreneurs

[00:00:00] 1, 2, 3, 4, My New Credit Score 1, 2, 3, 4, My New Credit Score 1, 2, 3, 4, My New Credit Score Bad credit can literally cost you thousands of dollars. You'll have higher interest rates, denied approvals, even missed job and housing opportunities.

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[00:01:45] The only thing you have to lose is your bad credit. Welcome to Black Entrepreneur Blueprint, the number one podcast and resource for Black entrepreneurs.

[00:02:07] I'm your host Jay Jones and Black Entrepreneur Blueprint was created specifically to educate and inspire Black entrepreneurs to launch, build and grow successful, sustainable businesses. Join us as we help build an economic power base in the worldwide Black community by building and supporting Black owned businesses.

[00:02:29] If you're currently an entrepreneur or want to be an entrepreneur, you're invited to join us each and every week here at Black Entrepreneur Blueprint. Welcome to the BEB family and get ready to elevate your entrepreneur IQ. Welcome to the Black Entrepreneur Blueprint, episode number 624.

[00:02:55] I'm your host Jay Jones and today we have another outstanding and informative show in store for you. Today's show topic is titled The Hidden Cost of Bad Credit for Entrepreneurs. The Hidden Cost of Bad Credit for Entrepreneurs. Now most entrepreneurs think that the key to success is making more money.

[00:03:14] Now but what if I told you if you had bad credit that could quietly be costing you tens of thousands of dollars every single year and also limit your options, your leverage and your flexibility. So we're going to dive into that today. Now before we get to today's show topic, let me just share a few things with the Black Entrepreneur Blueprint family. First and foremost, I want to welcome all first time listeners to Black Entrepreneur Blueprint. Welcome to the BEB family.

[00:03:44] Please stick around until the end of today's broadcast and I'm going to share all my social media contact information and resource links such as the link to 1234mynewcreditscore.com. That's the numbers 1234MyNewCreditScore.com

[00:04:04] If you have challenge credit right now and you're looking to move from point A to point B, this is a simple DIY software or micro SAS that you want to call it. And go there, enroll, there are no long term contracts and you can cancel at any time. One, two, three, four, my new credit score. Now let's get ready for today's show content.

[00:04:29] Today we're going to focus on what bad credit is, why you definitely don't want to have it and how it can impact you as an entrepreneur. And we're going to give you several solutions or a solution to help you move from point A to point B. So one of the biggest things is guys, many times entrepreneurs focus on income, but you ignore leverage. You focus on the income and I get it. No income, no business. So you got to have income.

[00:04:57] We definitely recognize that. But you also need to have leverage. All right. So most entrepreneurs, they're obsessed with making money, the marketing aspect, sales, social media, AI, lead generation. Perfect. You need to be focused on those. But many times we ignore the personal financial positioning, credit leverage and borrowing power. I'm going to repeat these three things again.

[00:05:22] Many times we ignore personal financing position, financial positioning, excuse me, credit leverage and borrowing power. And these are important factors when you own a business. So let's talk about income gets the attention, but leverage creates the wealth. Income gets the attention. Oh yeah, I got, you know, all kinds of income. That is great. You want that income as much as you can get, but leverage is really what creates the wealth. All right.

[00:05:53] Wealthy people use leverage. If you look at a lot of the multimillionaires and billionaires, they use real estate. And most times they don't buy their real estate outright. They leverage it. Other people's money, OPM credit is leverage and good credit guys gives you options. And that's what you want in life. And as an entrepreneur, you want to have options. The more options, the better. So an entrepreneurs guys, we need that flexibility.

[00:06:21] So I'm going to talk from a personal perspective here at how important personal credit is. So if you've listened to the show for any period of time, I mentioned that I almost lost it all twice. Once when my son was sick years ago. And then when I had my mortgage business in 2008, when the big financial crash happened, my first mortgage business. And literally guys, I almost lost everything.

[00:06:47] My credit got jammed up and it was real bad, but I was able to regroup, build two separate multimillion dollar businesses, get my credit back in order. So if you're in a situation right now, you're listening to this. There is hope, but you have to be strategic and recognize and understand and know what you're doing. Okay. So let's talk about, um, as I mentioned, income gets the attention, but leverage creates wealth.

[00:07:14] So when you have that leverage, right? When you have good personal credit, you have business opportunities, business opportunities appear, right? So you may need to be able to make a move real quick. If you see an opportunity and sometimes with those moves, you need to be able to leverage or use your credit. All right. Also, if you need inventory quickly, you can create a line of credit or use your credit cards. You need emergency capital. Things always happen.

[00:07:42] What they say, life is always life. And right. So you can use, uh, emergency capital, real estate opportunities pop up, right? That can happen. You need equipment financing or a business line of credit. So if your credit isn't right, guys, the opportunities become more stressful instead of exciting. So that's why you need to make sure that your personal credit is in order because it gives you options.

[00:08:09] So we want to make sure that we have these options because as entrepreneurs, we have to be able to make certain moves. And sometimes, you know, this isn't scripted guys. This is something that you have to do sometimes on a whim, but you need to have those options. Now let's talk real quick guys about the real cost of bad credit. So bad credit. Most people think it just means getting denied, but that's, that's not even the biggest problem. Yeah.

[00:08:37] You're going to get denied with bad credit, but that really isn't the biggest problem. So we're going to break down what we call the hidden tax, right? And my mom said, she used to say all the time, it costs a whole lot more if you're poor, right? Versus having money and having resources. So let's talk about the hidden tax. It is a couple of hidden taxes, higher interest rates. So when you buy your car, your house, your business loans, or your credit cards, your interest rates are out of this world.

[00:09:06] So you could have a, a 550 credit score and your interest rate on a car could be 15, 16%, or you can have a 700 credit score and your interest rate could be two, three, 4%. And that can be the difference of paying $900 a month for a car note versus 400, $500 a month for a car note. So the hidden tax, one of them is higher interest rates. All right. So you have to recognize and understand that.

[00:09:35] So the less you have to expend, the more that you can keep. I always joke around about hip pocket national, right? You want to keep as much money in hip pocket national as possible. All right. So that is the, one of the first hidden taxes, higher interest rates. Let's talk about another hidden tax with having bad personal credit, lost business opportunities. Can't qualify for funding. You see a great opportunity. It may be a franchise or something else, but guess what?

[00:10:05] When they ask you to fill out the application, you can't qualify. All right. And many times until you create business credit, most times the credit that, that people are going to look at is your personal credit. So it's super important. Also, you can't scale quickly.

[00:10:22] You're losing the business opportunity of scaling because you don't have the money or the actual credit to be able to scale and get the resources or product, whatever you need to scale or the marketing dollars. Okay. Equipment. You can't buy equipment, right? You can get, and I used to do equipment leasing. So you have to have decent personal credit to get equipment and buy equipment.

[00:10:48] So say you want to expand your business, say you're in manufacturing or production and you need machines. You might not be able to get equipment financing. And also last but not least, if you're in a product based business, you can't secure inventory. So these are lost business opportunities, being nimble, being able to make moves on the fly. That's what we need as entrepreneurs. And one of the foundational pieces of that guys is having good personal credit.

[00:11:17] Now, another hidden tax is higher security deposits, right? So when you go in and they start pulling your personal credit, when you're looking for office space, you know, you're going to usually have to put a personal guarantee there. Now, if your credit is bad, guess what? You may not get the office space or if you do, you may have a higher security deposit. Also, utilities.

[00:11:42] I know people that can't even get utilities cut on in their home, let alone their business, because they don't have a good credit score and they start running your credit for everything. Guys, they run your credit for damn near everything right now. It's attached to you. Even if you have a business. Yes, you have an EIN number. If you have an LLC or a subchapter S or a chapter S business.

[00:12:07] But look, you need to have good personal credit because when you start off, that's normally what they're going to focus on. Even getting cell phones or other things and also your insurance. So I'm in the mortgage business. So I have to have bonds, right? Security, security bonds, right? For for my business. So I have to be bondable. And those bonds, the worse your credit is, guess what? The higher the bonds cost. So this is another hidden tax.

[00:12:36] That's higher security deposit. So we talked about higher interest rates. Number one, lost business opportunities. Number two and higher security deposits. Number three. Now, number four. Stress and distraction. All right. Now, this is this is important, guys, for entrepreneurs. We're under enough stress as it is anyway. So why do you want to create more stress for yourself? So bad credit, guys, creates anxiety, pressure, reactive decisions and desperation.

[00:13:06] So many times we're forced into doing things we don't necessarily want to do, but we're desperate. So, for example, and this is even just in your personal life. If your car breaks down, you use your car to go to work and you have bad credit. Guess what? But you're desperate and you're going to have to go and take one of those buy here, pay here auto loans that are out of the roof. It's going to be crazy. Your interest rate is going to be crazy. What you're paying is going to be crazy.

[00:13:34] And it prevents you from getting back to square one. So once again, there's a stress and a distraction for having bad credit. Number five. Pay more to access money. It's pretty simple, guys. There's predatory lending out there. And even though it may not be by law predatory, it damn sure feels like it. When you go and you get a payday loan, when you go to buy a car from a buy here, pay here.

[00:14:02] When you get these credit cards that give you a thousand dollar line of credit and the charge to get the card is $150 up front. If you need cash advances and you get a higher interest financing. So you pay more guys to access money. So there's a real cost of bad credit. All right. And we call it the hidden taxes. Higher interest rates. Number one. Lost business opportunities. Number two. Higher security deposits.

[00:14:32] Number three. Stress and distraction. Number four. You pay more to access money. Number five. Now let's talk about why good credit is a business asset. So good credit is a business asset. It's not about impressing people, guys. It's about positioning. Good credit positions you to be able to do things that an entrepreneur needs to do. So let's talk about the benefits of good credit. Number one. Speed.

[00:15:01] You can move quickly when opportunities appear. How many times have you seen an opportunity that came about that was perfect for you, but you couldn't move on it because you didn't have good credit. So if you have a good credit, you have lines of credit. People will finance you and you're able to make make fast decisions. So speed. Another benefit of good credit, guys, is flexibility. Right. So you have more options.

[00:15:28] And one of my best friends always used to say, he said, all you want in life is options. Right. So you have more options with good credit. Number three. Lower cost of capital. Money becomes cheaper. So when money becomes cheaper, you can be more profitable. So if you have a hundred thousand dollar business loan at six percent versus one at 18 percent, guess which money is the cheapest? The six percent.

[00:15:55] And that difference that you're paying, if you have bad credit, could be money that's used to help build and scale your business. So it's really affecting you guys. Number four. Business growth. You can invest in marketing, inventory, hiring, expansion, everything to help grow and scale your business. And these are benefits of good credit. And number five. Peace of mind. You have a strong emotional, strong emotional point.

[00:16:22] Good credit gives entrepreneurs breathing room. You know, guess what? If something goes wrong, I have this line of credit over here that I can fall back on. So these are the benefits, guys, of good credit. So it's super important for you as an entrepreneur to make sure that your credit is on point. And I get it. Sometimes as an entrepreneur, I just gave you an example. Your business is going to pull down your personal credit and your business credit.

[00:16:48] So don't be, you know, frightened over that because that happens. And remember, your credit score is a snapshot of what you look like today. Now, you can't change your scores literally overnight. But if you're strategic about it and you know what you're doing, you can actually improve and restore your credit. So make sure you guys check out 1234MyNewCreditScore.com. It's a great app that I found.

[00:17:18] And I'm super happy to be able to partner with the founders of this to promote it. I've tried it myself. Looks good. My credit is pretty good. But it did find something on there that I actually didn't realize was on my report. And I got off. It was a couple inquiries that needed to come off that should have been dropped off anyway. So if anybody knows anything about credit, the more hard inquiries that you have, it lowers your score. All right.

[00:17:48] So that's one of the things I told you guys earlier about almost losing it all twice, but being able to come back and be blessed to come back. So I'm speaking, guys, when I talk about credit, I'm speaking from personal experience. I've had, you know, bad credit when I almost lost it all twice. I was down at one time down in the 530s and was able to build that back up strategically.

[00:18:12] And one of the things that you need to be able to build your credit back up, guys, is good income. So you need to have income so you can continuously pay your bills on time. So I know as an entrepreneur, sometimes that doesn't happen. Sometimes your income is jacked up. So you need to do whatever you need to do so you can make sure that you pay your bills on time. Now, let's talk about some common credit mistakes entrepreneurs make. All right.

[00:18:41] And this is a tactical thing. Number one mistake, guys, this is the biggest thing is ignoring your credit. You can't fix, guys, what you don't monitor. You cannot fix what you do not monitor. So you need to be cognizant of what your credit looks like. I'm not saying checking your credit score every day. You know, I'm not saying that. But every other month, every two to three months, just make sure that you're not ignoring your credit. OK.

[00:19:10] Another common mistake is high utilization. All right. And utilization is maxing out your cards. If you have a $10,000 card and you have more than $3,000 on that card, that's over 30 percent. That utilization is going to bring your scores down. OK. That utilization. So you want to keep your card usage and your credit usage under 30 percent. And that's for revolving cards. Now, if you have a card note, that's a fixed payment each month.

[00:19:40] All right. But for your revolving charge cards or credit cards and lines of credit. Also, your ratios. You want to make sure that your ratios aren't out of whack in terms of your income versus what you owe. Another mistake is, guys, your revolving debt. I just kind of talked about that. You want to make sure your revolving debt isn't too high. Mistake number three, late payments. So you need to be organized. You need to have systems.

[00:20:07] And some people like to use auto pay so they don't miss a payment. Now, it's funny because I don't like auto pay. I like to be able, in case I have to pay from a different account or move stuff around. I got a lot of balls up in the air. So I don't use auto pay. But I do use a scheduling system and organization. Mistake number four, not reviewing your credit reports. You need to look for inaccuracies, old collections, reporting issues.

[00:20:32] I just mentioned to you guys that I had two hard inquiries that weren't removed from my credit report. So after a year, a hard inquiry has to be removed from your report. So make sure you check your credit. All right. Mistake number five, paying hundreds or thousands of dollars for information that you can learn yourself. All right. So one, two, three, four.

[00:20:56] My new credit score dot com is a DIY credit repair platform that you can actually do it yourself without the software or the software as a service. What we call it a micro SAS product. But one of the things is, guys, when I tell people since I'm in the mortgage business, I have a mortgage brokerage firm. I'm a broker owner and I see good credit and bad credit all day, every day.

[00:21:23] And I tell people, I said, look, you can go to some of these high price law firms, Lexington Law and all these other places. They're going to charge you all types of crazy fees. And the problem is what you don't understand is the longer they keep you on their system, the more money they make. So everything that they're doing, literally, you can do yourself.

[00:21:45] And that's why one, two, three, four, my new credit score dot com is super important because it walks you through and they actually have a DIY credit repair guide once you enroll. And it's literally twenty nine dollars a month and there is no long term contracts. So one of the things, guys, if you don't have the time, obviously, you can go to one of these other services and pay, you know, a couple hundred dollars a month.

[00:22:13] But I will warn you, because once again, being in this space, I've had clients that come from these big law firms that supposedly repair credit and they've been in there six, seven, eight months and they're paying two hundred, three hundred dollars a month. And literally nothing much is happening. So they're really wasting their money. So these are some of the things that you have to be or understand. And if you understand it, you can take care of it yourself.

[00:22:40] And with the assistance of A.I. and software like that, you're able to do it yourself. It's effective and you're saving yourself money. So today we're talking about the hidden cost of bad credit for entrepreneurs and really what that means. All right. So before we get to the last segment, guys, let me just share all my social media contact information and resource links.

[00:23:05] So I mentioned at the top of the show, go to one, two, three, four, my new credit score dot com. Those are the numbers. One, two, three, four, my new credit score dot com. If you have damaged credit, you need to restore your credit. And even if you want to be an affiliate, they have an affiliate program where you can sign up and share your personal links with other people that have bad credit. Not exactly sure. I think you get 50 percent of the monthly payment.

[00:23:35] So if you're in the mortgage business, if you're in the car business, if you are in H.R., you have a big, big network. Just share the links. People out there have bad credit. And guess what? A lot of them that you think have good credit don't have bad, don't have good credit. And what happens is people don't like to share. Hey, I got bad credit. But guess what? Send that link out if you become an affiliate to people in your network, in your phone. You never know who they know.

[00:24:02] So once again, one, two, three, four, my new credit score dot com. And also, if you need to connect with me, guys, anything long. Hit me on my email. Jay Jones at Black Entrepreneur Blueprint dot com. That's J.A.Y. J.O.N.E.S. At Black Entrepreneur Blueprint dot com. Facebook, Black Entrepreneur Blueprint. LinkedIn. Go look for Jay Jones, Black Entrepreneur Blueprint. Instagram. I have two IG accounts. The first one is Jay Jones for real. J.A.Y.

[00:24:31] J.O.N.E.S. The number four. R.E.A.L. Second one is Black Entrepreneur Blueprint. And also YouTube. Make sure you connect with us and follow us on YouTube. We have additional content on YouTube that is not on the show. So go to YouTube. Type in Black Entrepreneur Blueprint. Hit that subscribe button. Now, if you are a first time listener or watcher, wherever you're listening to this or watching this, make sure you hit that subscribe button.

[00:24:59] We drop a new episode every Monday morning, 5 a.m. Eastern Standard Time on all your major podcast platforms and YouTubes. So make sure you hit that subscribe button. Now, let's get back to the last segment of the show. And today, guys, we're talking about the hidden cost of bad credit for entrepreneurs. So in order to be able to be flexible, nimble, take advantage of opportunities, it all starts with your personal credit.

[00:25:29] That is one of your foundational pieces. Yes, you can build business credit. And you definitely want to do that. But before you're in business for a long period of time and even afterwards, many times you're going to have to use or have a personal guarantee on certain things. It could be office space. You know, I had personal guarantees on, you know, 15, $18,000 a month office space in Philadelphia, personal guarantee.

[00:25:56] And I wouldn't have been able to get that office space if my credit wasn't solid. So these are the things that you have to understand. It gives you options, guys. And that's what I've been talking about this whole thing. It is one of the foundational pieces of being able to grow and scale a business. Can you be successful in business with bad credit? Yes, been there, done that. Is it easier with good credit? Absolutely, because it gives you options, access to capital.

[00:26:26] We always talk about in our community that we don't have access to capital. We lack access to capital. But if you know how to position your personal financial picture and your business financial picture, then you'll have access to capital. Is there racism? Yeah, it's intrinsic throughout our society. But guess what? If you're good enough on paper, then you're going to be able to get that loan.

[00:26:52] So once again, it's a foundational piece and you need to recognize and understand how important that is. So I don't care where you are in your journey as an entrepreneur. You could be starting out. You could be 20, 30 years in. You need to solidify your personal credit and get it. I get it, guys. I know it's hard sometimes because your business falters and that causes you to falter personally. So you have to develop a plan, follow that plan, get back on your feet.

[00:27:22] And the plan really starts, guys, with having a consistent income, consistent income. So you can pay your bills consistently. You build that up and now you start restoring your credit. And now you take it to another level. And once you get to that point, I'm going to tell you guys, people are going to be coming to you trying to give you money. You know, with my e-commerce business, I had Stripe coming to me to give me money.

[00:27:48] I had Shopify that does business loans. And they're based on not just your personal credit, but your income that you generate from your business. But they do check your personal credit. So understand how important that that cornerstone is to entrepreneurial success, guys. You have to understand and know that you need good credit to give yourself options and give yourself leverage.

[00:28:17] We got enough adversity as entrepreneurs from the door. So you want to have that extra bullet in your gun by having good credit. And it opens so many doors and those doors and that leverage can be the difference between you being a successful entrepreneur and you failing. Now, I say this each and every week, guys, because it is true. We get more and more downloads because of you, the BEB family. I appreciate you guys so much.

[00:28:46] Please continue to share the information about the podcast, the ecosystem, the online courses, everything designed to help you elevate your entrepreneur IQ. Remember, it's not about me. It's not about you. It's about us. It's about building an economic power base in the worldwide black community by building and supporting black owned businesses. Love you guys. See you same time next week. Peace. Peace.