What school didn’t teach you about credit (thread) rts appreciated

Credit is often confused as a negative thing but can be a huge tool if used correctly

There are positive ways to use credit

&

There are negative ways to use credit

👇🏼
First let’s determine the difference between credit & debt

Credit is the money you get lent to that lenders expect you to payback in good faith(What u get)

Debt is the obligation created when you get credit. Principal + interest and fees (what u owe)
Your fico credit score comes from your credit report which is grouped into five categories

- payment history
- amounts owed
- length of credit history
- new credit
- credit mix

Your credit score determines the level of trust lenders will give you

More trust = more money
65% of your credit score comes from your payment history and the amounts owed

This means that the more frequently you pay your debts on time + the less outstanding debt you owe, the higher your score will be.
Another major thing that is looked at is your credit history

The longer you have history of credit the stronger your credit score and trust will be

This is why it’s important to start a card as early as possible AND only use it for the bare minimum
Did you know that you can start a credit card w/ your parents as co-signers as young as 16?

This allows you to start with a higher credit score + build history faster

Your parents can use the card themselves and restrict access to you
Positive ways credit is used

- to use other people’s money for business deals
- to be approved for real estate loans
- to receive better interest rates on mandatory loans
- travel hacking
Negative ways

- consumer debt
- predatory student loans
- to pay off debts
The biggest benefit of credit is OPM

Other people’s money

The best deals I’ve seen are where someone finds an opportunity to make money and finances that opportunity 100% without using a dime of their own

You may not be at that point but it’s better to prepared for it
Extra benefits of credit

Travel hacking:

With the right cards you receive bonuses and miles for every dollar you spend

These miles can later be exchanged for cash or travel credits ✈️
Interested in learning more about credit, trading, finance, real estate and entrepreneurship?

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