Tag Archives: credit

Gold Credit, Green Credit….

Very recently, a social media friend posted the importance of immediately getting a credit card after college in order to build credit.

I nearly fainted.  I consider this ignorance.  And it’s advice like this that fuels my desire to write about money and to urge people to pursue financial freedom.

I despise this credit score crap.  The better your credit is, the more reliable you have been deemed, and the better interest rates are available.  And if you have poor credit, you have been deemed not so reliable, and the not so good interest rates are available.

How does that make sense?

Sir, your credit score is sitting at 340.  Unfortunately, the best interest rate we can offer is 18%.  Logic says we shouldn’t give you a loan at all, but we will because we care about you.

The reliable spender should not be punished, I should clarify.  But why make the difficult situation more difficult?

However, I need to be clear that I don’t think having a system in place is a terrible idea.  It has its perks for an economy that is in need of nourishment and can’t rely on another government bailout.

If you’re my age-ish, you may remember the housing market crash in 2008.  If you don’t remember, they made a movie about it recently.  Pretty neat.

Before the crash, banks were giving loans to anyone and everyone.  It didn’t matter whether or not they could afford it.  It didn’t matter whether or not they’d ever be paid back.  They just threw the loans around like they were $0.05 pieces of bubble gum that lose their flavor after 2 chews from a Macy’s Day Parade float.  With a big Snoopy balloon.

Then, 2008…

Banks:  Mr. Government… we need your help.  Haha.  You won’t believe what we did… No, it’s worse than that… Yes, that’s right.  We really screwed up.  Well, we can’t really get out this hole without help so can you spot us 10 billion?

Government:  Oh yea that’s fine.  We never budget anyway so we have plenty of money that we can use on whatever we want without angering tax payers at all. Keep your doors open.

Anyway, I hate that we need a system, I hate that people get all worked up over their credit scores and reports, and I hate all the discussion and chatter about it.  It’s mostly thoughtless nonsense, but I hear about it nearly every week, and that’s only because I work from home most of the time and don’t see anyone and don’t watch television much.

I can imagine most of you hear about it daily.  I’m sure of it.  It has obviously secured its hold on us, just as the Devil schemed.

Your credit report is just an overall record of your paying for stuff.  It has detailed information about your debt vs. payoff history.  If you want a more elaborate explanation, you won’t find it here.  Rest assured, it isn’t that important.

What is important, or at least what everyone is so bent out of shape over, is how to improve your personal credit score.

I’ve had people scoff at me for not knowing my credit score.  I let them get to me and I did that free credit score thing.  And I checked it a few times.  And then I was told that every time you check it, it drops!  Every time someone runs your credit, your score drops.

Why???

Either no one can tell you why because they don’t know, or someone will tell you a reason why and will believe that it’s a logical, solid system.  Person #2 is making lots of money off of your credit.

I quit concerning myself with my credit score.  I’ve never paid for a credit report on its own.  Why should anyone have to?  It belongs to you.  It’s your history.  It’s your personal stuff.  How can anyone hang on to your private, personal history of anything, regardless of what it is, and demand that you pay for it in order to see it?

Either no one can tell you why because they don’t know, or someone will tell you a reason why and will believe that it’s a logical, solid system.  Person #2 is making lots of money off of your credit.

It obviously doesn’t do any good to check it frequently.  Whenever you go to buy a house and apply for a loan, they will run your credit, charge you for it in closing costs, and give you a copy of the report.  The seller will often times pay the closing costs, depending on your location, situation, and negotiating skills, resulting in a free report for you.

I’ve also had people ridicule me for not getting a credit card.  I never listened to those guys.  I had enough debt to pay off.  I didn’t have time, I thought, to deal with them.

Well, let me hit you with this piece of information:  without getting a credit card and without paying for a credit report, I have excellent credit.

All the banking folk scream at me like Ay!  You need a loan?  I’ll hook you up!

Why?  Because they know I’ll pay it, and they know I’m a safe commission.

Let me tell you how.  While a portion of my advice is to differ from my aforementioned friend, most of my advice is to FRET NOT!

Not what you were looking for?  I figured.  Just keep reading.

I don’t like writing in list form, but all the cool kids are doing it so…

1.  DON’T GET A CREDIT CARD!…. YET

This is a post in itself, and I won’t dwell too deeply for now, but just know that it is not necessary to get a credit card in order to build your credit.  Yes, it can be a decent tool, but it is not, by any means, necessary.

There is ONE way and one way ONLY to use a credit card.  And it is NOT to get one as soon as possible and to spend freely.

Advising someone to get a credit card in order to build credit is like advising someone to go to church in order to go to Heaven.

Sure, it’s a good tool.  But it certainly isn’t so cut and dry.

Particularly, those of you who are in debt, I advise you NOT to get a credit card until you have a better grasp on your finances.  Then, you can read my future post about how to go about choosing the right card, using it properly, and getting free money with it.

This will upset the man.  Because the man wants your money.  But he can’t have it.

Bottom line:  you do not need a credit card in order to build credit.

2.  BUY A BIG SCREEN

No, don’t spend money you don’t have just so you can have cool stuff.  But many places will offer 0% financing for a certain period of time on certain things.

I’m basing this idea solely on the assumption that you will not go out and buy a television with your loan money.  Please don’t do that.

If and only if you have a bit of spare money, and you want a new flat screen or you need a new dryer, dishwasher, face-lift, etc., find out how many months you can pay with no interest and subtract 1.

For instance, say you spend $600 on a 50″ flat screen after taxes and all, and you have no interest for 12 months.  Subtract a month.  Then divide your total price by the number of months.

600 ÷ 11 =  $54.55.  Always round up to the next dollar,  $55.  This is your minimum payment every month.  And if you pay this exact amount for 10 months, your 11th month balance will be $50 and you’ll not spend a penny on interest.

The reason I want you to subtract a month is because you won’t get your first statement until about two months after your purchase.  I’m not sure how they are counting.  It should be that your first statement is month #1, but I will not put it by them.

I don’t assume anymore because I got really tired of the response.  For a while, I hypothesized.  And while I realize it is part of the scientific method backed by some data and experience, I still don’t enjoy that it is only considered an educated guess.  Therefore, my new word is deduct.  It’s what Sherlock does.

Now, we will deduct that whoever we bought our flat screen from started counting months before they started sending us statements, and, thus, they’re at month #2.  I have not tested this process, and I won’t.  If this method ends up paying off the product a month earlier than it would accrue interest, we’ve lost nothing.  Just do it.

The reason we are setting up our own minimum payment is because whoever you bought from will set you up a much smaller monthly payment so that you will continue paying into interest after your 12 months are up.

Now, there are a few places who will only offer these interest free purchases if you purchase via credit card.  Their credit card.

Again, I warn you against credit cards, but if you follow the method above and ONLY have a balance on the card when paying off a non-interest accruing purchase, you’ll be fine.

[Aside from that type of purchase, NEVER keep a balance on a department store credit card.  They will eat you alive and smile while they do it.  Every store has them, and every store paints a pretty picture.  If you know how to use a credit card (there’s only one way) and you are able to juggle a hundred different ones, be my guest.  I don’t particularly enjoy focusing on so many.  And I don’t recommend it.  Lots of stuff to forget.]

These types of payments WILL build your credit.  Don’t rush.  This is a marathon, not a sprint.

I hate that analogy… running sucks.

And another thing about these purchases…

3.  HAVE THE MONEY FIRST

I’m referring to purchases that are attainable, obviously.

I don’t mean save up $150,000 before you buy a house.  I don’t mean save up $20,000 before you buy a car.

What I mean is, if you want a $600 television, but you also want to finance it (interest free), I would advise that you have $600 readily available at any time so that you can pay it off at a moment’s notice.  That number will decrease every month, but still have the money ready.

Now, I understand this isn’t always possible.  But if it isn’t, make sure the purchase you’re making is not a 60″ plasma.  Maybe buy a much needed mattress instead which, in my and the general public’s opinion, is a very necessary investment.

If you have the money to pay cash on your vehicles and homes, you likely aren’t reading this.  But you guys would be surprised how many rich people don’t have their funds together.  They’re always broke and have their money wrapped up in other junk because they listened to too many people tell them they needed to have all this stuff and to build their credit and to invest in the future and to have a retirement and life insurance plan and now their monthly bills outweigh their income.

It would be wonderful to pay cash for everything.  The fact is, it isn’t possible for the vast majority.  But what do you need?  Up to this point in my life, college, a house, and a vehicle are the only things worth borrowing money for.  And even then after much thought and consideration.

No, having the cash and saving it will not improve your credit.  It is just a surefire way to make sure your credit doesn’t get worse by suddenly being unable to pay off a TV.  But setting up an interest free payment on something will show the score keepers that you did have a debt and you did pay it off.  It will build your credit.

4.  PAY WHAT YOU OWE

If you have student loan debt, there are several options available to have them forgiven after a certain period of time.  There are likely more options on their way.

I’m certainly not against loan forgiveness.  As I’ve said before, the motives behind human acts are pure.  And Sallie Mae can afford to forgive some stuff, I promise.

However, when I was paying back my loans and was told of the different ways to have them forgiven, I really thought it was more work than I wanted to do.  I also had a sort of sense of responsibility to pay it all back and have nothing left hanging over me, as if Sallie would one day show up at my doorstep and say Hey.  Remember that time…..

But forget student loans.

Let’s focus on your other debt that has no chance of being forgiven.  The credit card folks are relentless.  No grace there.  Mortgage?  Gotta pay for that.  Auto loan?  They want their money.

The worst thing you can do for your credit or your sanity  prior to paying off loans is to obtain more loans.

If you have a loan accruing interest, and you have the cash to pay it off, PAY IT OFF.  This came up with Ned recently.  He’d heard that paying it off immediately will have a negative impact on credit.  I’m not saying it doesn’t.  But even if it does it isn’t as bad as paying interest.  Interest is not your friend.  Ever.

If you want to see a prime example of what not to do, look no further than our beloved federal government.  It seems their idea of eliminating debt is to spend more money, or, as I like to call it, pure stupidity.

First of all, quit using your credit card.  Second, pay it off way quicker than what they’re asking you to do.  If they had it their way, you’d never pay it off.  When you come out of debt, your credit score will rise.

5.  TELEPHONE BILLS… AUTOMO-BILLS

This is one that’s so overlooked it isn’t even funny.  There are so many utilities that we rely on:  water, sewage, gas, power.  Even if you rent you still usually have to get these set up in your name.

Well, set ’em up in your name.  Always pay on time.  Always pay the full balance due.

As a matter of fact, pay early to ensure your payment isn’t lost (which rarely is the case with all the online stuff these days).

If you are late or you underpay, your credit is affected (effected?  Never have known the difference).  And said effects are negative.

I happen to know for certain that there are specific companies who will reward you for paying all of your other bills on time.  When I switched our auto insurance from one company to another and they saved me $60/month, I asked how in the world they were able to do that for the exact same coverage.

Paraphrase:  Ya credit real good, man.  Ya pay ya bills on time.

I really cannot stress the importance of not being late on a payment.  Not to mention late fees and penalties and the like.  Before long you owe double what you paid last year at this time!

Do I need to remind you to budget?

Budget, good.  Late, bad.

Don’t make them come looking for you.  They’ll bring the cops and all.  They might bust your door down, and you can’t afford new hinges.

I’ve read that if collections gets a hold of one of your bills, it stays on your record for 7 years.  So obviously we don’t want to go there.  Just pay it.  If you’re already late, get current ASAP.

Important note:  ASAP is an acronym for as soon as possible.

6.  AVOID BANKS

You can still go to the bank.  You can deposit checks and continue your weekly transactions and withdraw some dollars and such.

What I mean is avoid the loan officer banter.

I’m sure these guys are good people for the most part.  I’m sure they don’t intend to harm anyone.  But just think about their job for a minute.

They are paid a modest to moderate base salary with bonuses and raises based on commission.  That means that the more they sale, the more they make.  And there’s nothing really horribly wrong with that.

Other work environments are run the same way.  Pops has his own bike shop.  Do you think he’s going to make any money if no bikes show up for repair and maintenance?

My job is even set up to be paid as you complete jobs.  I don’t have to find my own work or convince people to buy my product, but it’s still based on performance.

As a matter of fact, I would prefer this method as a business owner.  If you want to get the most out of your employees, tell them if they do not work, they do not get paid.  You’ll have the best staff on the planet.

However, this method does have a flaw, and to know the flaw is to simply put yourself in the position of the loan officer.

A man walks into the bank to dispute a charge on his account that he did not authorize.  After you have settled the matter, you remember your training and ask him if he is interested in a credit card with your bank.

Now,  do you really think it’s beneficial for the man to get a credit card?  Do you really have this man’s best interests in mind?

You’re only doing your job, right?  (I hate that excuse, by the way.  So were the Nazis).

This is the problem:  the loan officer wants/needs to make more money, and he will do so by making a sale.  I can’t fault him for that.  If I was forced to have his job, I would do whatever I had to do in order to provide for my family.  I honestly wouldn’t care if the guy got a credit card and couldn’t pay it or racked up loads of debt.

I got my commission.  I’m happy.

And that’s why you avoid them until you’re ready for a house or car loan.  They can and will be helpful when the time is right.  But I wouldn’t go near them for advice on how to get out of debt or how to build credit.  For these purposes, they are our enemies.  They want what is best for them and their employer.


If you follow these guidelines, I guarantee you will have decent credit.  It’s after we’ve experienced financial freedom that we can focus on getting the good credit.  It’s just crucial to understand that decent credit is good enough.

No one will deny you a loan.  And really, we want to avoid loans altogether if we can.  So if you have a house and a car, you’re sitting in a good spot.

I know things can happen, and it really doesn’t hurt to keep your credit up.  But let’s just be smart about it.  You know why you keep hearing that you need to build your credit?  Because most of the people telling you to do it are the ones making money off of your ignorance!

It’s worth noting that Smokin’ Hot Wife has no credit.  None.  When our loan givers ran our credit for our house, she didn’t even pop up in system.  And you may read that and think

Oh no!  What is she gonna do?

What shall become of her?

Where will she go?

Somebody do something!

Goodness gracious, peeps.  Where Does Your Hope Lie?

You want good credit?  Great!  It can absolutely be beneficial.  But it isn’t the end of the world if you don’t have it.

Hey, my way is proven.  You may follow it and share it if you must.

Do not conform.

P.S.  Merry Thanksgiving!  Eat!