Importance of Creating and Keeping a Good Credit History
I have had a change of heart! In my previous posts I told you how I hate credit cards. However having given great thought to my vision and strategy, a good credit history will be essential for my accent.
There are people I never lend money and the reasons are simple.....either they do not pay back or simply because I dont know enough about them to trust them with my money. The same thing applies to banks. They will give loans or mortgages to people who have shown in their credit histrory that they can repay their dues.
I have a vision to go into properties. By the way I stay in London and the property market here is not bad at all. The great thing about properties is that you can get a mortgage from a bank and a 5% (if it is your first home purchase) or 10% deposit. This means that if you want to buy a 100,000 home you will need only 5,000 down. Sorry my medieval laptop does not have a pound sign lol. Dont forget that with that 5,000 you will also need a good credit history since the bank will do what is called a credit check on you. The best way to create a credit history is to take a credit card.
How to create a good credit historyI was so eager to create a credit history that I hopped onto the first credit card provider I saw. This was an Argos Card which provides credit through Vanquis Bank. I quickly filled in all the details on the application form and SEND! I waited paitently for my credit card but got a regret letter. I was so disappointed. Damn! They told me that "at this moment having reviewed your circumstances we regret to inform you that you have not been successful in your credit card application bla bla...." and some other technical jargon. The reason they could not give me credit in my opinion was not based on my ability to repay but on my lack of records. I have literally zero debt! So their system screamed "ERROR".
So I set out to find out how I could get a credit card with no record at all and started googling how to get a credit card with a "poor credit history". I do not have a poor credit history I have no history....anyway you get the point. So I came across a credit card called Aqua. This card gives credit to novitiates at higher interests of about 35.9% APR. Their rate however goes down 5% every year for 3 years if you dont default on your payments. So I applied and got this card. I am using it to buy my groceries every week and pay them off every month. My groceries are about 20 pounds a week and simple math gives ermmm (counting fingers and toes....) yes.....80 pounds lol. That's very humble. Wish it could go lower but hey I dont wanna starve.
In about 1 year the big wig credit cards will want to roll with me. When that happens I will take out a loan and invest in my various high yield vehicles and do what is known as interest arbitrage. Getting money at 4% and investing it at 10-25% back in Zimbabwe. I just love the developing world. Gives you a chance at making super profits.
So I want to build my investment portfolio first before I do leveraged property portfolios. This means that I will be using debt to fund my property purchases. This is why I am creating a credit history and changing my value of despising credit cards. They are now a means to an end. There are other ways of creating a good credit history out there but today I've just talked about what I did. I like the pragmatic way of seeing and doing things because when someone has done it, so can you!