More Money, Less Work.
5 Sep
The very best reason to have more than one or even just two credit cards is to help you establish a good credit rating with the three credit bureaus. Having a great credit score will enable you to utilize your muses to their fullest potential and will also open up many doors when applying for an account with a wholesaler or vendor.
You should have at least three credit cards (but not an excessive number, no more than five) with a balance of approximately 18% on all cards. Unlike what most sources tell you — having a $0 balance on your cards is NOT a great way to get higher credit scores. In fact, having no balance shows that you don’t actually know how to “manage” your credit to your benefit.
Most important, never max your cards out and make sure you never go over-limit. Even though it may seem counterproductive to keep your cards at 18%, you will see much better credit scores in the long run. Just make sure to avoid any credit card that has an annual fee attached to it. In addition, make sure you use all of your cards at least one time every six months. Cards that are considered “inactive” will not be of much help. Paying a bit of interest is a small price to pay for building excellent credit.
Here’s an example of how to use three credit cards in a positive way — all while helping your muses make you more money:
- Card 1 & 2 are used to 18% capacity each month to pay for PPC advertising via your muses’ Google Adwords programs, plus MS Adcenter / Yahoo (Overture).
- Card 3 is used for your “everyday” expenses (up to 18%) of the credit limit, this allows you to keep track of your daily expenditures so you can keep on budget and make sure you are hitting your goals for your Dreamlines.
If you have a credit limit of $5,000 on each card 1 & 2, you will have approximately $1,800 available to use for your PPC programs (18% of $10k overall limit). By showing your ability to manage creditor debt — the Fair Isaac (FICO) and other two credit bureaus (Experian & TransUnion) will interpret a higher range of credit scores in your favor.
In time, you can use your higher credit scores to request an increase in your cards’ credit limits in order to have even more access to funds for your PPC programs (you may find that you will quickly exceed your available 18% as you create more and more successful muses). And, let’s face it — Google doesn’t mind accepting your credit card(s) as payment for your Adwords accounts.
You can request a credit increase over the phone and even online with your card issuer, in fact, by managing my credit so well over the last few years, I have successfully had increases without having my credit pulled at all!
I’d recommend you get ahold of an American Express card, as well, if you don’t already have one. Once you’ve done enough Google PPC charges each month on your American Express you’ll be able to qualify for an AMEX Centurion card (you won’t mind the $5k setup and $2,500 annual fee once you’ve achieved this feat, trust me). If you haven’t seen one, it is also known as “the black card” and is made of titanium. You’ll be able to run all your muses’ ad programs from it and not worry about hitting a credit limit each month. Plus the discounts and free flight upgrades are awesome.
If anyone needs any help or has more questions about credit, I’d be happy to assist when I can. (Please don’t hesitate to ask via comments, but don’t look for a quick response… give me some time to get an answer back to you!)
5 Responses for "Credit is important! (as I posted at FHWW)"
found this very helpful…. had no idea how you use credit cards could mean so much. i’m bringing my cards down to 18% asap! thank you.
This is probably the best detailed explanation on credit i’ve ever seen. all I have wanted to do was help my credit score, this is great. I also cannot wait to apply this for my muse and see how far I can take it! I SO WANT A BLACK CARD. =)
I run a balance on my credit. I look at it as investor money. I pay it down then use it to purchase equipment and product. I usually run between 30-45% of capacity. I think 18% is a pretty sound number. I think I will make that my target. By the way, the Boxter is awesome looking. I am a changed man. Thanks for the recommendation.
18% seems pretty arbitary. Where did you get that figure? I’ve seen 50% and 75% and 90% discussed as key cutoff points on FatWallet Finance but haven’t heard anything about 18%.
Does anybody have any advice for credit cards in Europe. I am from the Netherlands and I have been reading about super credit cards. But the ones I can find in my country are not very interesting. For example I can not find any cash-back credit card.
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