7 Hacks to Using Credit Strategically to Build Wealth

As a Christian and an occasional financial literacy table leader for my church, some are

surprised by the fact that I do embrace credit. The fact is, I treat credit the way I would treat fire or a sharp blade. Used correctly, it is an amazing tool. Handled mindlessly, and you have a possible fatality ahead.

Even Jesus recognized that we are IN this world, even if as Christians - we are not considered citizens of this world.

John 17:15-16 “ I do not ask that you take them out of the world, but that you keep them from the evil one.They are not of the world, just as I am not of the world.”

To function in this world today, especially in the USA, ignoring credit or becoming ‘credit invisible’ will make prosperity and wealth more challenging to grasp and enjoy.

Impossible? No! But, why dig a trench with your hands when a shovel or backhoe would do a better job?


Caveat #1: The content presented here is for educational purposes and to raise awareness and should not be considered legal or financial advice.


Caveat #2: Check the banks you hold credit cards with. Especially some secured credit cards are locked to the limit of your secured deposit with no room for expansion or interest rate change no matter how good your payment behavior. If you have any of those, upgrade to the more flexible options as soon as you establish an improvement in your credit score.


Caveat #3: 5 of the 7 hacks mentioned are open to small business owners only.

Hack #1: This Credit Utilization Strategy May Increase Credit Limit

This single strategy has earned diligent followers the gift of unrequested, credit limit increase repeatedly through the life of the card. I have personally enjoyed this and so has my clients. I have noticed that banks seem especially willing to reward you with unsolicited higher spending limits during the Christmas holidays.

When the limit is increased, so is the 30% spending threshold. For example; if you have a $1000 credit limit and you keep your balance at or below $300, if the bank increases your credit limit to $5000, you can now spend $1500 or less and still be maintaining a 30% or less credit utilization.

Having access to more funds to spend, while maintaining a healthy credit utilization is my favorite wealth expansion hack and worthy of the #1 spot.

Hack #2: Have Your Cake and Eat it Too! The Recycle Money Strategy

Got paid? Other than the funds for car and mortgage payment, or anything that won’t take credit as a form of payment, send the rest of your paycheck to pay down your debt. Then, use the newly reloaded credit card to buy stuff. I explain this strategy in more detail in my Best Seller book, CASHercise. This hack ensures you pay more than the required credit card payment minimum and you look like a #CreditBoss to the credit card company. Yep! You guessed it! The recycle strategy tends to make you seem worthy of credit limit extensions, which loops you back into Hack #1.

OK, so the following hacks are limited to business owners, but I am sure a bunch of you reading this are, or eventually will be. So if you are not a business owner (or one yet), enjoy hacks #1 and #2, or be inspired to start a business and use these next hacks to help you build more wealth.

Hack #3: Build a Business Credit Profile

Trust me. The effort is worth it. Most entrepreneurs and startups use personal credit and loans from family and friends to fund their new business adventure. The first 5 years are the most investment intensive years and profitability is rare, so rare, the SBA says 50% of startups fail in this timeline. This is because of the availability of urgent funding to ride this cash-intensive time dries up really quickly. Personal credit tanks and the ability to continue cash flowing your business grinds to a halt.

UNLESS…
You make the effort to build business credit.

It does take time and you do often start your business credit profile on the shoulder of your personal credit, but eventually - your FEIN will replace all needs to enter your SS# as your business develops that financial persona that it already legally holds.

Banks tend to offer higher credit limits to businesses even though the same owner would have either been denied or offered significantly fewer limits on the personal credit side. I teach this process and show you how to get started here. If you have $5K-$10K to throw at this process, I also have a resource to help you build a business credit profile that opens up $50K, $100K and more in credit lines in a 6 month to one year window (results not guaranteed but very doable).

One of the benefits of business ownership is the corporate veil. That veil protects our home and private assets should the company fail. However, buying things with personal funds for the business or using business funds for personal assets pierces the corporate veil and exposes your family to corporate lawsuits. Building business credit and using business credit for credit purchases for your business is wiser than continuing to use personal funds and exposing your family to future lawsuits and losses.

Hack #4: Apply for credit where you shop most

So this may be a Duhhhh! I already knew that concept - but for the record, I mean apply for business credit where you shop most. This is where guidance is useful. Not knowing the minimum criteria your supplier is looking for to offer credit may have you applying to a sure rejection. However, clearly - if where your business shops most offer you credit, you just freed up your cash flow and can restock your inventory and have more opportunities for increased sales.

Hack #5: Offer credit to your customers and report them if they don’t pay as agreed

This is a sweet tip that honestly, you should be paying me for. However, I am banking on your ability to see I give value whenever you connect with me - even remotely, and for free - that a seed is planted for you to connect with me when you do need the services I offer.

How many more sales could you make if you offer credit to your clients? Now, before you worry that they will not pay you if you set your business up to report their payment history, there is a good chance they will stick closely to the agreement. If you connect with me, I can help you decide if this option is a fit for your business, and how to go about setting that up.

Hack #6: Use credit to track taxable write-offs

So this is more of time is money hack. If you save time, you save money.

We all know that having a business gives us the opportunity to acquire business supplies and write many of those off annually. Where most of us get in trouble is, data tracking and proving our expenses. While your new business is growing, the owner and their handful of supporting helpers wear many hats and often, things fall through the cracks.

If you use a company credit card to purchase company-related expenses, your data and record-keeping for write-offs is much easier at tax time. No more shoeboxes of thermal paper fading receipts that you need to manually enter. Maximize your write-offs by having your business credit keep track of business expenses for you.

The fact that the expense is on the business card also makes it a business expense, especially if you use hack # 6 with hack #7.

Hack #7: Increase your business perks before you give yourself a raise

So, we have all heard that President Trump only takes a $1 paycheck. In fact, this is not new - many Corporate Executives appear broke on paper or take a $1 paycheck while living an obviously luxurious lifestyle.

This is a hack of enjoying company perks on the company’s dime.

Need a new car? Before you buy one with personal credit and funds, let the business buy it and drive a company-funded car. You have the car, but your personal assets would say you own none. I am no lawyer, so be sure to check with your lawyer here because if you ever file for divorce, your soon to be Ex could claim you pierced the corporate veil if you do not do this hack right. Before you give yourself an income raise and increase your personal tax bracket, if you are the business owner, consider adding corporate lifestyle perks first.

You will not be the first business to own a vacation cottage, boat or other lifestyle perks that you get to enjoy without the personal cost or liability.

Just a reminder, you can buy nicer things for less money with excellent credit! For example, one of my clients pays more for her used Kia than my son pays for his BMW. If you are ready to put your financial house in order and build your business credit, connect with me. As I mentioned, initially, your personal credit will be scrutinized as you start to build your business credit profile and we can help you with that as well.

Prosperity is not entitled but it is within reach. Profitable stewardship creates debt-free wealth.m