Page 107 - Winning The Credit Game Bundle (CK Patrick)

Both in personal finance and business, it’s important to
understand why it is easy to obtain any line of credit you are
offered. Is it because it’s a mutually beneficial situation for you
and the lender? Or because the lender knows they will extract
far more money from you in repayment than you are actually
borrowing?
In my simple business credit-building strategy, we will focus
first on lines of credit that are both low-risk and easy to obtain.
This will allow you to start building credit history with relatively
low risk. We will then move on to more exclusive and more chal-
lenging types of credit, allowing you to build your skills over the
course of six months or so. This can be thought of as the fastest
possible timeline for building your skills and credit using an
optimal strategy within the confines of the business credit
system.
In the four tiers I use to discuss business finances, lower-tier
types of financing are generally those which are lower-risk and
easier to obtain, while higher-tier types are either riskier or
harder to obtain. The presumption is that as business owners
master less risky types of credit and build credit history, they
will develop the credit history and the skills they need to obtain
and successfully profit from more challenging types of financing.
It’s worth noting that the phrase “tiers” may be used in
different ways by different parties in the credit and finance
world. Experian, for example, uses “Tier 1 credit” to refer to the
very best business credit which is accomplished through many
years of work. 1
I don’t find this approach useful since it does not help busi-
ness owners to build their credit step-by-step from the ground
up, and specific credit score numbers can be used to more
precisely understand one’s chances of approval for new lines of
credit. So in this book when we refer to “tiers” of business credit,
we will also be referencing the following terms:

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