Credit: The Secret Weapon in Building an Empire

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Credit: The Secret Weapon in Building an Empire

How do poor people become wealthy and rich people continue to grow richer?

CREDIT CREDIT CREDIT

It's one of the most important things they should've taught us in school to prepare us for the real world!

Growing up in a working class family, I was told that debt was BAD and everything should be paid in full upfront but I should have a great credit score. While that is partially true, it is nearly impossible to scale without utilizing credit. A credit score acts like a life jacket, keeping us afloat during rough financial waters. Imagine being trapped in a sea of debt and drowning in interest payments without it. Credit can be the savior of our financial lives.

As an entrepreneur, a struggling one at times, I've relied on my great credit score and healthy credit-to-debt ratio to come out on top in the end. This has allowed me to build businesses, purchase office equipment, properties, cars, and more. My credit score is my secret weapon that has helped me survive and thrive financially over the years.

The key to success with credit is to use it responsibly and manage it well. This means paying bills on time, keeping credit card balances low, and avoiding maxing out your credit limit. By following these simple steps, you can build and maintain a high credit score that can be leveraged in various ways. I follow these rules and achieved the elusive credit score of 850 at one time.

Your credit-to-debt ratio, also known as your debt-to-credit ratio or credit utilization, is a crucial factor in determining your credit score. A general rule of thumb is to aim for a credit-to-debt ratio of 30% or less. For example, if you have a credit card with a $10,000 limit, you should aim to keep your balance below $3,000. This demonstrates to lenders that you can handle your debt and use credit responsibly.

Credit scores range from 300 to 850 and are typically divided into the following categories: Poor (300-599), Fair (600-699), Good (700-749), Very Good (750-799), and Excellent (800-850). The higher your credit score, the more favorable terms you're likely to receive when applying for loans and credit cards.

1. Poor: A score of 300 to 579 is considered poor. If you have a score in this range, you may have difficulty getting approved for credit, and if you are approved, you'll likely have to pay high interest rates.
2. Fair: A score of 580 to 669 is considered fair. If you have a score in this range, you may be approved for credit, but you'll likely have to pay higher interest rates.
3. Good: A score of 670 to 739 is considered good. If you have a score in this range, you're likely to be approved for credit, and you'll likely receive competitive interest rates.
4. Very Good: A score of 740 to 799 is considered very good. If you have a score in this range, you're likely to be approved for credit, and you'll likely receive low interest rates.
5. Excellent: A score of 800 or higher is considered excellent. If you have a score in this range, you're likely to be approved for credit, and you'll likely receive the best interest rates and loan terms available.

So, how do you harness the power of credit to build your business empire? Here are a few tips to get you started:

1. Build your credit score: A good credit score can open doors for you, from getting approved for a loan to securing a lower interest rate. Make sure to pay your bills on time, keep your credit card balances low, and limit the number of new credit applications you make.
2. Get a business credit card: A business credit card can help you separate your personal and business expenses, as well as help you build a credit history for your business. Just like with a personal credit card, be sure to make payments on time and keep your balances low.
3. Consider a line of credit: A line of credit can be a valuable tool for businesses that need access to funding on an as-needed basis. With a line of credit, you can draw on the funds when you need them, and only pay interest on the amount you use.
4. Be strategic with loans: If you need to take out a loan to grow your business, be sure to shop around for the best interest rate and terms. Consider a Small Business Administration (SBA) loan, which offers low-interest options and a range of loan programs for small businesses.
5. Build relationships with lenders: Building a relationship with your lender can pay off in the long run. By establishing trust and demonstrating your financial responsibility, you can increase your chances of getting approved for future loans and get better terms and rates.

They can't keep us down, shared knowledge is power...Jamison

#Economy #FinancialManagment #CreditScore