Small Business Credit Profile: Valeria Fine Jewelry
Why owner Lucas Horton thinks his cash back cards are true gems
Erica Sandberg is a prominent personal finance authority and author of “Expecting Money: The Essential Financial Plan for New and Growing Families.” She writes “Small Business Credit Profiles,” a weekly column featuring small business owners' journey with credit and credit cards for CreditCards.com.
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Lucas Horton, the Dallas founder and owner of Valeria Fine Jewelry, took the long path to his profession. After earning an undergraduate degree in radio, television and film, he returned to school for an MBA. He landed his first job in the tech industry, and the fit was terrible.
“I was pigeonholed in that career,” says Horton. “I hated it. But then sometime around 2006, I did something totally different. I bought a pair of diamond earnings on eBay and sold them on Craigslist, making $50.” He then tested it again with another pair of earrings and then moved on to engagement rings.
A year and a half later, he was laid off from his job. “I said ‘that’s it, I’m doing it,’” says Horton. “I enrolled in jewelry classes and got my graduate gemologist degree from the Gemological Institute of America.” In 2008, he opened Valeria Fine Jewelry. The timing was right. Due to the economic downturn and soaring gold prices, people were selling their pieces at a discount, so he bought them and created new jewelry with the stones and precious metal.
Although Horton used much of his six-month severance to get the business up and running, he also relied on credit cards – and still does.
Did past experience with credit cards shape how you handle them today?
I definitely hurt my credit when I got my first cards! I got two in college that had limits of $7,500 and $5,000. It didn’t take long before I maxed them out and then defaulted. That experience is forever in my mind. I had bad credit for seven years, and once you have that, everything in life is more difficult.
By the time I started my business, I had been out of college and grad school for a while, so had time to repair the damage. I went back and paid those bills off. Soon my credit scores were over 750, which helped me get credit for myself and the business. Now I don’t take on any debt that I can’t pay off or justify the financing costs.
What credit cards do you use for your business and why?
I have the Chase Ink Business Cash credit card and the Capital One Spark Cash for Business. I get at least $1,500 a year in cash back for doing nothing; just charging and paying them off. With the Chase card, I get 5x the rewards for paying my utilities, such as internet, phone and cable, with my card. I spend hundreds of dollars a month on the card, so the points add up fast. I try to wait until I’ve accumulated at least $300 before I redeem. Typically, I go out to dinner with it. Sometimes I buy gift cards with the cash back, put it back into the business or use it as a statement credit, but usually it’s for enjoyment. I like the Capital One card because it offers 2 percent cash back on everything. I try to wait until I hit $1,000 before I pull that money out.
See related: Best cash back cards of 2019
Before I got the business accounts, though, I used personal cards. I can’t remember which, but they had a long interest-free introductory period. I used them for my CAD (computer aided design) program, travel and tuition, my website and loose diamonds. Those cards didn’t have rewards, so I closed them when the interest-free period expired. Interest on those purchases could have added up to hundreds of dollars, so I came out ahead.
Any lessons about credit cards you gleaned along the way?
I learned to manage my accounts by checking them a lot. I don’t depend on anyone else or automated payments. I check the statements on my phone, and make sure everything looks OK. I see charges all the time that I don’t recognize, and this gives me the chance to step back and figure out if they really are mine. I do this at least once a week, while I’m waiting for something – it’s a good way to pass the time. Then I pay my bill in full once a month.
What advice do you have for other small business owners?
What you have available to charge (your credit line) is a huge factor in your credit score, so more is usually better. And as long as you have older cards that keep your average credit age long, you can close any newer cards if you want to do that. It shouldn’t impact your credit score that much and you can get credit cards with better bonuses and higher limits. Also, don’t worry about your scores when they’re over 730 or so. It doesn’t make much of a difference after that.
Only get the credit cards with benefits that you will truly use. If you’re into cash back, get the cash back cards. I love them, but if you need to travel for business, the cards that give you miles or perks for traveling might be better. There are so many options for small business owners. You really have to research them!