CLOSE Your Credit Cards To Escape DEBT

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3:39When I first heard the words, you have lung cancer, I was in shock. It's a diagnosis that changes everything. So what does it really mean to advocate for yourself when you're living with non-small cell lung cancer? Listen to Health Discovered on the iHeartRadio app, Apple Podcasts, or wherever you get your podcasts. Let me ask you this. As far as people trying to recover from bad credit, if they're overwhelmed with credit card debt, what are some options? Can they call to negotiate a settlement? Can they call and negotiate at a rate? Obviously, it's bankruptcy. But if you're just in a situation where you can't get it paid down, what are some options for people?

4:26So when it comes to credit cards, if you just can't pay it down, well, number one, you have to make sure that you stop using the cards. Stop buying things so that you can manage it properly. Number two, it's so tough right now because we're in a time where credit card interest rates are the highest that they've ever been, ever So a lot of people with credit card debt is just mounting, you know, it's just growing every single month So the best thing you can do at this point, if it's just like out of your control and you do not foresee yourself being able to pay that credit card down within the next 90 days The best thing to do is honestly to close that card right now so that you can then work on a payment plan.

5:10Now, don't close it and then forget about it and not contact your bank. No, close it, but have a plan to work out either a settlement with the bank or an agreement to pay it back. If you close it and do nothing, then it'll probably end up a charge off within 30 or within 60 days. But closing it so that you can stop the charges temporarily, stop the interest a little bit and work on paying it back. You can, I would say you can, of course, get another credit card. You can transfer that balance. But most likely, if you are in credit card debt, you probably don't even have the barring power to get another credit card to transfer the balance to a lower interest rate card.

5:54So, yeah, you can settle with banks. and now a lot of banks are debt and tax time is coming up so banks settle tremendously during tax time like they bank on that time so now's the time to try to you know come up with a conclusion on how you're going to settle your balances um and you know rectify it like your habits but yeah you can settle you can't settle but you got to know that you you will have to pay it I actually went through that as well. Yeah, reached out to a bank. I think at one point I was late or something. I think I had utilized the credit card to the max. Then I was late. Then they raised the interest rates from like 19%.

6:35This was like my college credit card. It went up to 29%. Then it became just ridiculous. I looked at the pay off date. It was like, it seems crazy now, but it was 2035. And this is like the year 2000. I'm like, all right. Nice house. Yeah, I'm like, there's no way this is going to happen. So then I called and they consolidated it down to a point where I had to pay it off. But I just had to make sure I paid six consecutive payments or seven, something at the same exact amount. Yeah, usually it's like six to nine months. Yeah, so when it comes to things like that, when we're trying to pay off debt, because there's been different strategies.

7:05And I wondered if you have one, right? Is it do I pay the car that has the highest usage or do I pay the one that has the least usage so I pay that off and then I work my way? Like a snowball effect? What's your thoughts on that? So that's a great question. I do like the snow. So if your goal is to just get rid of your credit card debt and you don't really care to raise your credit score at this time, you're not trying to use your credit, then the snowball effect is probably the most effective. Get the credit card with the highest interest rate, pay it down and then work your way down. Right. Right.

7:35However, if you are still trying to use your credit and want to grow your credit while you are paying down your utilization, then I personally recommend look at any car that has a utilization over 48 percent. Tackle those first. If you can get all of your cars under 48 percent, then you don't have what's called the max out penalty on your credit score. Meaning when you apply for credit, it's not showing that you have a car that's maxed out. Right. Like people think maxed out is 100%. After 48%, banks are looking at you like you have a maxed out card. So get all of your cards over 48%, under 48%.

8:08Then the next tier that you should aim for is under 30%. So once you get all the cards under 45%, work to get them under 30%. And then you just work your way down if you care about your credit score. What's the penalty after 48 %? Is it points? Yeah, oh, points for sure. So basically, depending on how many cards, any cards that you have over 48 % and depending on the score that they're looking at, I'll say homes. I'll use the mortgage scoring. Every card over 48%, you're going to, you basically should minus 15 points per card from your score. And also if you are if you have cards that are on or 30 % to 45 or 30 % to 47 % You pretty much need to match or you need to um subtract about 10 points per car, right mortgage points So so yeah, the 48 when it comes to credit cards Is showing that you're maxed out, right?

9:04So get all of your cards under 48 % Then get them under 30 % and then you know work your way down if you care about your score But if you just are concerned with reading yourself of credit card debt as fast as you can or the cheapest that you can, then, yeah, the snowball effect is probably the one that makes the most sense because the interest does continue to build, of course, on credit cards. So let's talk about business credit. What's the difference between personal credit and business credit as far as how it's looked at for your credit score and how you get it and stuff like that? Yeah. So most business, most business credit cards or loans are not solely based.

9:41It's not based on your personal credit score. It's based on like your business profile score. And so there is a way to build your business score, but it is different and separate from like your personal credit score. What I tell everyone, make sure, because I find a lot of people, especially in the industry that will only care about their business score, but then like just don't care about their personal score, which to me, it's backwards. If you have a great credit score, a personal credit score, then it also sets you up to have and build great business credit easier. Like, you know, you're not I have never had any of those net 30 accounts that people recommend.

10:12I don't I don't deal with all of that. But I do have a lot of business credit extended to me simply by using my personal credit. People always say, like, you don't want to PG your personal credit. I mean, I personally I do not subscribe to that theory. If I have great personal credit You absolutely can I can definitely Vouch for my business credit With my personal credit because number one lower interest Like if you are just going solely off your business credit profile You're going to pay higher interest For pretty much everything If you PG it most of the cars that PG It's lower interest Personal guarantee And so also building establishing personal relationships With companies like we talked about American Express That's the Like you can get an you have an American Express personal card.

10:57Now you can get an American Express business card. Same goes with Chase. Same same goes with most of the big banks. So, yeah, I personally build business credit on the back of my personal credit. And that does not mean that they're reporting on my personal credit profile. It just means that once I when I applied for that account, they looked at my personal credit. And I have no problem with that because it's good. Right. So I wonder from from that aspect, when they look at your personal profile, and your business profile, do inquiries work the same? Because I know a lot of new businesses will apply for new credit cards.

11:30And so they look at the same. And how does that work? Are they negative? Are they derogatory if you have a certain amount within a year? So are you referring to like if you do PG and they do run your personal credit and it's for a business account, are you saying does those affect? Well, I know if I apply for like five credit cards, which I wouldn't. Business or personal? Personal first. Oh, okay, okay. So that would look at as too many inquiries within a certain amount of time. Right. If I have a business and I'm applying for credit cards, do those inquiries, does it look at the same? No, it isn't looked at the same when it comes to business because most of the times like the funding requirements are different and you know, but however, when it comes to your personal credit, credit card increase way more than installment increase.

12:13Um, so if you're applying for a car, you can apply, like if you go to a car, like, you know, they'll pull, they'll run your credit like 20 times for most people. If you don't come already with your financing, those are not counted individually. A lot of people freak out when that happens, but if you are doing, if you're applying for installments, loans within a 14 day timeframe, there is something that's called deduplication, which all increase of the same manner will be, um, basically there you're only going to be affected at the weight of one. You'll see all of them on your credit profile but they're not all individually impacting you now when it comes to credit cards they're the worst type of increase because they every single credit card inquiry does impact you the same but i mean here's the thing increase are only worth up to 55 points so i tell people all the time people worry about increase more than they worry about payment history credit utilization credit age and it's just like you should not be trying to um save or protect your credit increase more than you are building credit.

13:12Because a lot of people will not build credit because they're scared of increase. And it's just like, so you're going to, you care more about 10 % of your credit profile than collectively 75 % of your profile. That doesn't make sense. When you're building credit, you're going to get increase. I don't care about increase ever. Because if you have a great credit profile, they will never affect you. There has never in the history of ever where someone denied solely for increase. And people convince themselves that the increase is what caused the denial. Like, no, you were denied because you have a late payment or X, Y, and Z.

13:49A bank is not going to deny you solely because of an inquiry. If your credit profile qualifies for the card or account, they will be crazy. A bank wants you to, you know, of course, borrow the money from them. And if you are denied for an inquiry, you can always get a reconsideration. Hey, Ernest, what's going on? We always talk about using tools that help you stay in control of your money. Cloner is one of those tools. It gives you flexibility to decide how you want to pay for your purchases, whether that's paying now or spreading payments over time. The best part is you can manage everything in the Cloner app.

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