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Graphic Credit Management

The Importance of Proper Credit Management in both your Business and Personal Life

Learning about credit management never stops. I thought I knew everything you needed to know about credit management and credit scoring but I was wrong. Over the past 3 months, my wife and I have made 3 larger purchases. I purchased a treadmill for my wife and, we purchased and financed two newer Range Rover Sports. Mine was a low mileage 2016 and while hers was a lower mileage dealer-owned 2020.

Let’s talk about the treadmill first. The treadmill was priced at $3800 and the offer was that we could finance with zero-interest for 24 months. WOW, what a deal! I always like to use other people’s money. So, I purchased the treadmill and I was issued a new Visa credit card to cover the financing. Since this was a newly issued credit card, I was only given a credit limit of $4000 even though at the time I had a credit score of 815. Well, guess what happened! Since the set credit limit on the card was only $4000 and used $3800 of my limit, my utilization rate sky-rocketed. This in effect drove-down my credit score by over 100 points. Lessoned learned, beware of free credit offers and understand the true cost of that purchase. Remember that this can occur in both personal and business situations. Buyer beware!

Let’s talk about what I learned about purchasing some used Range Rover Sports. My wife and I traded in two high mileage vehicles for some newer vehicles with much less mileage. I believe everybody can relate to this scenario. To minimize depleting the cash reserves we decided to finance the vehicles over 5 years, knowing that we would probably pay them off later this year. So, we purchased both vehicles at 5% and 1.5% interest rates, respectively. After the purchase I did some Google research, I learned that an installment loan has a different effect on your credit score when compared to other forms of financing. I learned that paying off your vehicle early is viewed negatively by the credit agencies while keeping the loan open to the full term and making the payments on time is actually viewed positively by the credit agencies and their scoring models. So, by paying down your loan balance to let’s say $100 or even $1000 dollars and then letting that final balance sit to the full term of the loan. It will be perceived positively and it will increase your debt management skills, and you will be rewarded a higher credit score. And, again this is not just a lesson in your personal life about how to manage your business debt.. To contact Drew Cashmere at South Florida Funding Group, an alternative business funding company, email at him at This email address is being protected from spambots. You need JavaScript enabled to view it..



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Weston FL 33327




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