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Let's Talk Freedom - How To Build Credit With A Credit Card

WARNING: After reading this blog, there’s a strong chance you’re going to want to write your high school a strongly-worded letter, reprimanding them for all the things they did NOT teach you.

The things I'm about to explain are so easy and so effective, you might just spend your nights racking your brain wondering why oh why no one ever taught you this before.

Let's break down exactly what credit is, how to use it, and what you can do right now - today - to improve your score.

Learning is the First Step: Embrace the Power of Credit

Understanding the nuances of credit is crucial for setting yourself apart as an entrepreneur. Personal credit and business credit play vital roles in shaping your financial journey, and each comes with its own set of potential pitfalls and mountains of misinformation.

If you don't qualify for a credit, there's hope. Even if your credit score is incredibly low, you can apply for a secured card. These cards have the potential to be game-changers when it comes to rebuilding or strengthening your credit score.

Decoding "Secured" Cards: Building a Strong Credit Foundation

To comprehend the significance of secured cards, it's essential to understand the difference between "secured" and "unsecured" cards. So, what’s the deal?

Traditional credit cards fall under the "unsecured" category. All this means is that they allow you (the consumer) to make purchases and pay them off later. This is the type of credit that most of us are familiar with. In contrast, a "secured" card requires you to make a collateral payment before utilizing the card.

By preloading funds onto the card, you establish a hard boundary that ensures you spend within your means. For example, if you put $500 onto your secured card, then once you reach that limit you can no longer purchase anything else until the balance is paid down.

This secured approach not only keeps your spending in check but also serves as a stepping stone to a better credit score. It's a safe and effective way to rebuild credit, hence the name: "secured."

Differentiating Debit Cards: The Power of Credit Building

At this point, you may be wondering why secured cards exist in the first place. The answer is simple: they are powerful tools for building credit. While individuals with solid credit scores and established credit histories may not find supreme value in utilizing secured cards, these cards prove invaluable for those with a score of 650 or lower.

By making minimum payments (typically around $200 upon obtaining the card), you can start using the secured card and establish a positive credit history.

Demonstrating payment history and credit responsibility is exactly what banks look for in individuals they can trust with high-utilization cards.

Qualifying for a Secured Card: Easy Steps to Obtain Your Key to Credit Success

Obtaining a secured card is often simpler compared to obtaining an unsecured card. To qualify, follow these three easy steps:

  1. Be at least 18 years old: Ensure you meet the minimum age requirement to apply for a secured card.

  2. Have a social security number, U.S. address, and U.S. bank account: Gather the necessary documentation to verify your identity and financial standing.

  3. Provide the required information in the online application: Fill out the application form accurately and truthfully, as any discrepancies could lead to delays or rejections.

Once you have the minimum payment ready and your account and routing numbers at hand, you'll be well on your way to embarking on a credit-building journey that will transform your financial landscape.

Understanding the Five Factors of Your FICO Score: Unleashing the Power of Knowledge

Your FICO score is a vital element in mastering your business credit. The best way to begin improving your credit standing is to familiarize yourself with the five CRUCIAL factors that influence your FICO score. A deep understanding of these factors will empower you to make strategic moves that will dramatically accelerate to boost your creditworthiness.

So, let’s take a closer look :

Payment History: The Foundation of Credit Success (35%)

Your payment history holds the most significant weight in determining your FICO score. It's crucial to make on-time payments consistently, as even a single missed payment can have a detrimental impact. Aim for years of on-time payments to reflect positively on your credit score.

Here in the Credit Stacking community, I share practical tips, tricks, and hacks to maintain a solid payment history and a consistent on-time credit payment schedule.

Length of Credit History: Building Credit Through Time (15%)

The length of time your accounts have been open plays a significant role in determining your credit score. The longer you can demonstrate a history of open accounts, the better your credit score will be.

In our Credit Stacking community, I emphasize the importance of keeping accounts open and never closing them, as it contributes to a stronger credit profile. You never know when those older accounts might come in handy!

New Credit: Balancing Inquiries for Credit Success (10%)

This new credit factor takes into account hard inquiries on your credit report. Translation: every time a lender reviews your credit report through a “hard pull”, it leaves a mark as a hard inquiry. Additionally, each time you are approved or denied for a credit card, it results in a hard inquiry. To put it simply, hard inquiries are bad for your credit health.

To minimize risk and maintain a healthy credit score, it's wise to strategically space out your credit card applications. By giving yourself a six-month gap between applications, you minimize the impact of multiple hard inquiries. Rest assured, this factor constitutes only a small portion of your FICO score.

Credit Mix: Embracing Diversity for Credit Success (10%)

Credit mix refers to the different types of credit accounts you hold. This factor assesses whether you have a diverse credit portfolio. What does that mean exactly? Well, do you only have revolving credit cards? Or do you also have auto loans, student loans, and a mortgage?

In my Credit Stacking mentorship, I advocate for a credit mix that includes some debt in each category. Having a mix of credit accounts can contribute positively to your credit score. Do keep in mind though that this factor only constitutes 10% of your FICO score.

Amount of Debt: Striking the Right Balance (30%)

The amount of debt you carry and your credit utilization rate play a significant role in determining your creditworthiness. While having debt is not necessarily a bad thing, maxing out your credit cards can negatively impact your credit score. It's crucial to strike a balance between having debt (e.g. utilizing your available credit) while also maintaining a low credit utilization percentage.

As a Credit Stacking hack, I’d suggest opening multiple business accounts to manage the amount of debt you take on. This approach allows you to distribute your debt across multiple accounts and maintain a healthy credit profile.

The Benefits of a High Credit Score: Unlocking Financial Freedom

While most experts focus on the negative aspects of credit, I want to shed some light on the remarkable benefits it brings when used responsibly. Credit, when utilized responsibly, becomes an invaluable resource for achieving financial freedom.

I leverage my lines of business credit to scale and fund my business ventures. Of course, the perks that come with credit usage aren’t too bad either.

Depending on your credit this could include reward points for free travel, and luxurious accommodations. However, somewhat paradoxically, accessing these benefits also requires a good credit score, to begin with.

Entrepreneurs: Unlock Your Potential with Business Credit

If you're an ambitious entrepreneur yearning to scale your business to new heights, it's time to explore the realm of business credit. Imagine the possibilities that lie ahead with a $50,000 credit card, offering 0% interest!

Whether you aim to expand your operations, explore new markets, or launch innovative products or services, business credit can be the catalyst for achieving your entrepreneurial dreams.

Credit Stacking Mentorship: Your Path to Credit Success

If the world of credit seems overwhelming or you're unsure where to begin, I invite you to join my Credit Stacking mentorship program. With my guidance, you can navigate the intricacies of building and utilizing business credit.

More than two thousand entrepreneurs have already benefited from this mentorship, gaining insights into improving credit scores and becoming part of a passionate and supportive community.

Don't let a low credit score hold you back from realizing your true potential. Seize the opportunity to master the business credit system and unlock the financial success you deserve.

Your dreams are within reach, and with Credit Stacking, you can make them a reality!


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