Having good credit is one of the essential pre-requisites for building wealth. To grow your savings you need credit (debt/loans). If you are scared of credit, then you are essentially scared of making money in large amounts, because it is loans that help to exponentially GROW your profits and eventually your savings. If you already have a large savings account or assets, than you don’t need debt to invest.
Cash only rarely builds riches. Cash combined with loans builds riches exponentially.
Repairing your credit
A Story
In January 2008, I was a fresh university, 3 months into my new job with a bunch of credit card debt. I applied for a line of credit to consolidate my debts for a Real Estate investment, only to get rejected and find out that my credit score was 635. I had paid my cards on-time, but my utilization was too high. So on an $8,000 card, I had $7,400 used up, $600 available. What this meant was that I couldn’t get a reasonable bank loan and was stuck with high interest credit cards. I started asking around and researching what I could do to boost my credit score.
Here is what I did:
1. Applied for and received second credit card from Citi Group, this expands your credit file.
2. Accepted a promotion and transferred my high interest balance to the new card, which gave me 1 year @ 1% interest. This allows you to pay down your loans down quickly, because of low interest.
3. Consolidated my debt, spread out credit card debt over three cards.
4. Stopped making full payments on non-credit reporting expenses in order to pay my credit cards faster. This includes cell phones, heating bills, cable T.V. and internet. These bills do not get reported on your credit file, so don’t stress over them if you can’t pay. This allows you to focus on high interest debt repayment.
5. Finally after first four steps I applied for a line of credit 6 months later and was approved.
You can devise a plan that suits your situation to ensure your credit rating remains high.
Good credit is key for the young opportunist trying to make investments and start the process of wealth building. It is often those investors with the deepest pockets of cash and margin (loans) who can take advantage of good stock prices.
- Ato Mensah, MastermindGrowth.com
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