If you haven’t heard about anchor, it’s the easiest way to make a podcast. Let me explain, it’s free, there’s creation tools that allow you to record and edit your podcast right from your phone or computer, and an coral distribute your podcast for you so it can be heard on Spotify, Apple Podcast in all the other platforms.
You can make money from your podcasts with no minimum listenership, it’s everything you need to make a podcast in one place, download the free and crap or go to anchor FM to get started. So the next thing that you kinda wanna look at is what’s called credit mix, it doesn’t have a huge impact under credit score, but it’s worthwhile… Credit mix is exactly what it sounds like it’s… How variable is your credit… This is talking about, Do you have credit cards? Do you have personal loans? Do you have student loans? Do you have a mortgage? Do you have rent, that’s reporting, do you have… And he out loans or less those all account a credit. But I welcome back, where each week we talk about tips, tricks to methods for growing an amazing small business pipeline.
I’m your host, Dr. Anne Robertson, on this podcast, you can expect segments on communication sales.Prospecting it in close.
Thank you to everyone that I support my 100 episodes in a 0 day. able, going to the 20 enjoy the show.
Episode number 10 here on the prospecting show. I am, again, trying to do 100 episodes in 100 days, and today’s episode is just me here alone talking about credit, a lot of people that… I’ve worked with a lot of friends, people see me traveling around a lot and keep asking, How do you travel and not spend a lot of money doing it.
And I… The big thing to look at is, well, if you wanna travel, you might as well fix your credit and improve your credit at the same time, so just to give some background, individuals who don’t really know i E super… Well, I originally grew up in Canada, and I am living in the great United States of America now. So because of that, a lot of great things happened.
But there are some things that are a little different.
One of those things, which is looking at establishing us credit, most people when they’re 16, they get a credit card, maybe 18 get a credit card, anything before that, it’s probably secured with their parents, so most Americans by the time they’re 25, around my age, they would have someone between six and eight years of credit, I did not have that in the United States because I came here in 2014… The end of 2014 to go to school. And then I actually started working at the end of 2017, early 2018.So because of that, basically what ended up happening is I had to establish a bunch of credit, and the way that I did that was a little bit of credit arbitrage, so for those of you don’t know what tone about credit… Credit score, the United States CO, is one of the most common scores, and with that kind of the max, about 8-50, you don’t really need… So for a perfect credit score, but there’s certainly is a difference between having an 850 and the 700 per se, and basically what I ended up doing was I looked at it and said, Well, I wanna do a few different things in one 0% credit, so I can leverage it. I wanna get somewhere around 100 to 200 and available credit, and I also wanna be able to travel at the same time while keeping costs down and building the credit score up.
And so for those of you don’t know a ton about how credit works, there are a couple of big factors on credit, the one that everybody knows is payment history, right, you gotta pay your credit cards on time, usually there’s a statement, it goes from the first to the 30th of the month, and then there’s another 15 days in the month or so beyond that, where you have this kind of grace period where you can pay the card, so all those expenses that you put on there, they go through a 30… Sometimes 45-day cycle, and then you get another two weeks or so to pay them now, in order to get really good with credit, you gotta have a strategy around it, and so the first thing I worked on was personal credit score, with credit cards, the scores that you’re getting… Are all based on credit card score, so if you get credit for a car, there’s an auto-FICO score, if you get credit on a home, like a mortgage, there’s a different score there, but when you’re doing revolving credit like a credit card… There’s a different scoring system. So in the credit card space, basically what ends up happening is you have to leverage the standard credit factors on which is payment history that we talked about before, but then there’s also utilization, which is the next biggest category, and utilization is basically calculate as a percentage. So if you have a 1000 credit limit and you use 1000 and credit that month, the statement post with 1000 do, that’s a 10000 and a 10000 for a total… At 10% utilization, now utilization is calculated not only within one card, but also across multiple cards for that FICO score, so if you have three cards with 10000 on them as available limit, that’s a 3000 worth of available credit. If you have a 100 on the first card, zero on the next card, and zero on the other card, that’s a 100 out of 30000, so your individual utilization on one card is 100 out of 10000, which is 10%, but across three cards, you’re using 100 out of 3000. so you’re looking at 3-33 per cent utilization.
So that’s the next factor in credit, now, the one that really jacks up when you’re either young or you’re new to a country and you’re trying to establish credit is what they call the average age of accounts, a AAA average age of accounts.
Now, the average age of accounts are calculated based on the age of each individual card divided by the total number of cards, so it’s a lot like utilization where it matters within one card, but it also matters amongst multiple other cards, so average age, the way that works if you have no credit cards right now, your average age is zero, if you get a credit card today in… Wait one year. In one year now, from now your average age of accounts or your A is one year.
Now, if you have two cards, but you get that one car today, you wait six months and get another card, and then you wait another six months, what’s gonna end up happening is you’ve got one car that’s now 12 months old, ’cause you wait the full 12 months and that one card you got at the six-month point is now only six months old, so it’s the 6 and the 12 that gets you 18 divided by two year average ages, nine months.
And so for those of you like to hack credit, you definitely wanna have something around 13 to 16 years worth of average age of accounts, if you’re in the United States, New to Mike in to the country overall with a kind of working social history. credit, credit availability, things like that. You’re probably not gonna have that 13 average, but it doesn’t really matter because you’ll end up getting there, and so because of that, probably what’s gonna happen is you’re gonna sit in that 06 to 09 range, less than that, so you’re just gonna have a little bit of difficulty, you try to apply for a mortgage or something crazy right away, or a big auto loan or something like that.
So the next thing that you wanna look at is what’s called credit mix. It doesn’t have a huge impact on your credit score, but it’s worthwhile, credit mix is exactly what it sounds like, it’s how variable is your credit… This is talking about… Do you have credit cards? Do you have personal loans? Do you have student loans? Do you have a mortgage? Do you have rent that’s reporting, do you have any auto loans or leases, those all account to credit mix, so the more variation you have, the better… And if you wanna shoot for maximal credit score, you need to have 21 accounts on average, so that could be 21 credit cards or it could be 20 credit cards and one out alone or 19 credit cards. One at alone and what mortgage, it doesn’t really matter, but you need to have some mix in there, generally speaking, people have more credit cards and one other type of credit, but it is definitely advised to get some revolving credit lines or loans that exist because then that shows that you have good dependency with your loans itself, so the way that the banks are evaluating you, it’s kind of like report card, they’re saying, Well, we lent this individual money and they paid it back on time, their payment history is perfect, they never missed a payment, they only used a little bit of credit. We gave them a 10-000 credit card. But he only used 1% of that or 10% of that or whatever it is. And then the last part is that the mix, he’s got… He or she has lots of different variation and the credit itself, they have a mortgage, they have a car, they got credit cards, they got a loan, they’ve got student loan, they got all these different types of credit that shows their responsible in different ways. Now, the reason that that’s super important is because at the end of the day, when you wanna go get more money from a bank, they’re gonna wanna see those particular things.
Now, the reason that this gets really dangerous in the United States is because the FICO score does not take into consideration how much available credit you have, so it reports the amount of credit that you have available based on number of credit cards and the loans and the leases and the mortgages and all that, but what it does not do is give you a credit score based on how much available credit there is, most Americans have one to two credit cards, and they’re usually 5000 limits or less, so they have an average of 1000 and available credit on carts.
Now also the average American makes somewhere around 3600 annual household income, I think is about 60000, something like that. And because of that, their credit avail, the available credit that they have with their cards is substantially less in their income, however, if you’re gonna get into credit hacking, you travel hacking, you’re definitely gonna have to have ridiculous high volume of credit lines.
So if you go out and go to some of the most popular banks with, in this particular case, for credit cards are gonna be chased an American Express, you’re gonna find that most of their cards, once you’re approved for them, they’re gonna start at 10000 limits, so you can see very quickly, if you open up 10 cards at 10000 a peach, you have 100 credit, which is awesome, and it’s probably far away in the income of most individuals, if you just took that across the United States, but that’s just the available credit doesn’t mean you need to use it, but in the US, the reason there’s so many bankruptcy issues, partly is because they lend or they do over extension of their lending, which makes basically means that the banks are learning more money than the individuals can pay back. So if you make a 60000 income, that’s 5000 a month.
If you have a 500 credit card, that’s already pretty dangerous, ’cause you need to pay that off one per month, and we all know you got taxes first, so you really don’t have 5000, so if you max out that credit card of 5000, you really can’t pay it back the next month, and now you start incurring interest of 20 to 22%, maybe 18%, something like that.
So those are the high level items about credit, next thing we wanna talk about is funding or basically we call OPM funding.
Now, op funding, it is other people’s money funding, and the way that individuals describe this is always a little different, the way that I tell people that this work is just look at whose money are you borrowing if it’s your money, which it never is, ’cause you’re using a credit card… Then it’s other people’s money.
So in the case of Chase, for example, if you go to Chase and you ask for a percent credit card, like the Chase Slate for example, that’s 0% for probably about 17 months, maybe it’s 15 months, 12 months. A Carta, my head right now, I’d have to go look it up, but it’s 0%, and that would be considered in OPM. Other people’s money, ’cause you’re getting money from them, 10, 12, 15000 based on your income at 0% for let’s say 15 months, that is an OPM leverage. Other People’s Money leverage, if you take that money, pull it out of the credit card with a cash advance on a card that allows that they don’t ding you for it on certain cards like the Chase late card, you take that, you write a check to yourself and you deposit it in your checking account and you invest that in a high-yield account, something that’s 10 to 15% high risk in one year.
Well, you just took your dollar money, 10000, let’s say on the card, pulled it out, put it in your checking account, grew it in a high risk interest, not a bond or anything like that, but something high risk, short-term in interest, like 4X or something like that.
And a 10%, you turn your 10 into 11 and then right before you gotta pay that off at the 14-month mark, you hit the 10K back on the credit card and you would pocket yourself a 1000 for basically doing nothing.
No, if you wanna take that one step further, you can use those dollars to other things, you can run Facebook ads with it, if you’re trying to build a personal brand, you could use it to hire somebody temporarily, so you get those funds out, or you could basically cash advance yourself, money for whatever other reasons you would want, and even if you had, let’s say, a high car loan, something that was… You had 5000 left on a car loan.
And you’re paying 6% on that.
Well, that’s not awesome, but that’s also not terrible, so at the end of the day, it’s like you could take that 5000 and pay that off immediately, so that goes down to zero, and then you can pay your credit card back over time, way that would work is you would take the 0% Chase late card, you would take out the 5000, write yourself a check, put it in your checking account, 5K, there’s no lost funds there just… Its one-to-one ratio, you take five, you lose five, the 5000, then goes over to your car loan, you cut that down, you no longer paying 6%, you’re paying 0%, ’cause you get 00% on that credit card for the next 15 months, and then basically, as long you can pay that 5%, that 5000 back before the 15 months is up, you’ve effectively saved yourself 6% on your car loan, ’cause it’s now 0%, so that’s basically an OPM leverage that you could do just as an example, but then we could talk about business funding, there are some cases where checking accounts will give you a 600 bonus to be able to deposit 3 000 into a checking account, so what you can do is that same thing, get a 0% card for 15 months and use that to fund the checking account with your 300 that they require, and then the bank will give you 600 immediately for that, and now you’ve profited 600 and you can just take the money back out, pay the credit card. And you’re good to go.
Now, that’s a very strategic method, I wouldn’t do that within the same bank, ’cause they might get a little bit funny about that, but the rules are rules, if you can fund with a credit card, you can fund the credit card, all you’re doing is using the rules here, you’re not really breaking, just kind of bending them in your favor, so that’s a funding strict strategy. The next thing and talk about is the 5 and 24 rule is kind of an unspoken rule for Chase Bank, chases a… Probably the biggest bank in the United States here, they have an unspoken 5 and 24 rule, which says that in the last 24 months, if you’ve opened any five new credit card accounts, they will not approve you for any cards, and so for those travel hackers out there, that has some of the best benefits, like the chaff I preferred, the afar reserve, the chase business in and some of these other cards are tied together, so if you are gonna do travel hacking before you do anything, make sure you understand the 5 and 20 port role because if you open Chase cards last, you’re gonna find out that you can’t open any of them, and then you can’t get yourself into a situation where you are able to leverage those points. So me, myself, one of my first cards, I got United States that the Chase Sapphire Preferred… It’s an 95 annual fee. You spend 4 000 in the first three months, and you get 60-000 bonus points. So I’ll say it one more time.
It’s the Chase Sapphire Preferred, it’s a 95 annual fee waived the first year, so cost you zero for the first year, if you spend 4 000 in the first three months, they will give you 60 000 points if you convert that to travel, it’s about 7-800 worth of travel, you could take a flight probably for two people, two directions, and you are in the United States, and sometimes you could even get some hotels, if you convert it to one of their hotel partners, you could probably get yourself three, four or five nights on that pretty easily, maybe a whole week, really depends on what you’re into, but if you can berth them right, get some bonuses and do the transfer and use them for travel, because the Chase cards travel card, you’re definitely gonna win there, if you switch off of Chase ’cause very talked 5 and 24 and some of their basic cards, and you go over to American Express, you’re gonna find the American Express has a great selection of 0% cards. You have the percent blue cash, every blue cash, you got the blue cash preferred, you have the every day cash, you at the every day cash preferred, both of those are 0%, you have the cash magnet that’s also as your percent card.
And there are a couple of other ones. There’s actually a blue business car that just recently came out that also is as a percent car, so all of those together allow you on average 12 to 15 months and 0%, so if you get good and creative, you can leverage that and do a balance transfer back out of that.
Now, if you get a credit card and you’re not sure the difference between the APR and the balance transfer rate, the BTR, you need to do some homework before you get crazy with this, I’m not providing financial advice here, I’m just telling you how you can do it but you need to read up and learn how these systems work, that you do it the right way, there’s no sense in doing something that you don’t know how to do, ’cause you get yourself in some serious trouble, I’m just presenting ideas and ways that you can actually leverage these systems that are currently in place are totally legal, so look at that for American Express, those different cards again, Blue cash, CLU cash or every day cash, you got cash magnet and a few other cards there.
It’s notable that American Express also has these other kind of cards called charge cards, that’s the AMX platinum DMX black hardware takes a lot to qualify for, but the AMX green, the MX, plumb and I accolad.
And so they have business and personal versions of almost all those cards there, the… Anyone that I believe does not have a personal version is the American Express Plum, which is a card… I have… The nice thing about that is it’s a charge card, so there’s no pre-defined limit, just like the gold card in the Platinum card, there’s no pre-defined limit, and when it reports for your credit score, all it does is show as one card, it does not show there’s no utilization because there is no limit, so there’s no 10000 limit where you’re using a 1000 and they’re calculating a 10% utilization.
What it is, is that they have a car, they showed us an open account, they show the average age of that account, but they don’t calculate utilization that won’t hurt you or help you. It’s kind of a neutral point there, but as you spend more money over time, that card will have more of a lion, and the reason I like the Plum Card, it’s a zero fee in the first year, 250 feet in the second year and beyond, but it gives you 60 days not. So if you wanna flow some money for business, you can do that, also, it has pretty high limits overall, so it’s kind of nice that might end up doing a product change here to something that the platinum card… Of the gold card coming up, but at the end of the day, a super happy with the car itself because it gives that flexibility to kinda pay when you want to, and having those that extra a month can be kind of strategic if you’re trying to move funds around paying down some loans or paying off some other debts, it’s a good opportunity to have that.
Now, balance transfers are really tricky or can be really tricky, if you know what you’re doing, it becomes a lot easier, but certain cards like the AMX every day card is a 0% APR and a 0% balance transfer, meaning that area… There’s no fee associated with taking money off of another credit card and moving it to that card, so the reason that somebody would do that is a couple fold, one, they have a credit card that, let’s say it’s 22% interest rate, and they have 5000 on that card and be in their past due, so they’re gonna have to pay 22% of that money.
What they can do is go openness AMX every day card and do a balance transfers, they take the 500 on the old card, move it to this card with a 0 fee, so there’s no fee, a transfer it and you’re gonna get 0 or 0% financing on that for the next 15 months. So the every day card is pretty much the only card that Americans press has that low is zero dollar bound transfer like that, pretty much all the other cards there in most of the Chase cards, other than the slate, I believe, could be a 0% APR, meaning there’s no payment to for 15 months, but there’s a fee associated with the balance transfer, which is usually 3% or 5, whichever is greater, and they just calculate that based on the situation, so it’s a lot like doing taking those funds out that I talked about, it if you have a 0% card and you wanna write yourself a check and pull all that money out of the credit card, wait 15 months and then put it back on so you can invest that money, you spend it some other way. That’s what you’re doing with a normal 0% APR occur when you do a balance transfer, the same thing happens if you have a card with Chase that has 5000 on it, and you want the American Express every day and do a balance transfer or transfer the balance from Chase to American Express, what ends up happening is American Express, right to check to chase chase deposits it and pay of the card, and then American Express assumes that debt from that other card, so that’s how you do balance transfers and how it’s going… I’m not gonna talk too much about repair ’cause it gets a little crazy, but for those young listeners out there that are trying to build their credit quickly, one of the biggest things for them, like I said before, is the average age of accounts… One way to help that is to get an AU AU, the right user, you can get one of those big talk to your parents or a sibling or somebody you know, tell them, Hey listen, put me on your credit card, and when you put me on your credit card, I want you to not give me access to take the card, cut it up if you want to put me on it there, that way that you can start inheriting their credit profile, and as long as they have good credit, those average age might be great, so if you have a parent, if you’re a young kid under, let’s say 18, and you have parents that are 45, let’s say they might have 20 years of credit history, if their credit is good, that individual under 18 can acquire all 20 years of credit history. Very, very quickly by becoming an authorised user on one of those accounts, so that’s a good way to get those average age of accounts up without being in a country very long time like myself, or just being young overall, so those are kinda some hacks, hopefully that helps. Everybody out there, if you have any questions about credit hacking, let me know, Connor at impact dot com co and or at syntax Santa. So on and thanks a lot for talking to listening to the prospect and show Here, I know this one was a little off-key on the content, but I thought it would help you guys out. Thanks a lot, have a great IT. ottonian Antoinette.
To Listen to this episode, please visit:
To listen to the previous episode 9 – B2B Healthcare Sales and Podcasting with Joe Lemon, please click here;
To listen to the next episode 11 – Selling With Email, please click here;