Credit 101 | How To And What Not To Do When Building Credit | B2B Vault - The BIz To Biz Podcast | Episode 260

You are now watching the Biz to Biz Podcast with Allen and Justin. Yo, what's up everybody? It's Justin live from B2B Vault, the Biz to Biz Podcast sponsored by Nationwide Payment Systems, hosted by this guy, the Sylvester Stallone of payment processing himself, Allen Kopelman. And in today's podcast, we'll be discussing credit, how to get it and never forget it. Credit 101, something like that. Uh, anyway, how you doing, man?

Doing well. Busy, busy, busy, which is good. Let's not complain.

There you go.

And, uh, yeah, life is good so far this week. Everybody's healthy, so we're good.

Yeah, I woke up yesterday, I felt like trash. I was— I don't know what It was weird because all weekend my skin was real like itchy. So I'm like, okay, this must be like, uh, like an after effect of COVID or some shit.

And, and I look it up. No, I didn't know.

It's not there no more. I'm not itchy anymore.

Okay, well maybe you just got an itch for a day.

No, it was like for days. My ankle up to my like above my knees anyway. It was really a strange sensation. I don't know what, how to really describe it. But then yesterday I just woke up and I felt like really, really tired. Like, I'm like, what the fuck? I'm getting sick again or something. You know what I mean? Like, like round 2 of COVID is, you know what I'm saying? It's like a relapse or something like that because I had like boogers again. I was like, what? Is going on, bro.

So I woke up one morning and I was like feeling all sluggish and everything. I thought I got sick, but I just was just tired, I guess.

Yeah, I don't know what it was.

This weather—

before I went to work, before I got to the office yesterday, I was like, you know what, I'm gonna have to stop. I went and got me some one of those immunity shots. I got a green juice, I got an immunity orange juice. I got a protein shake, I just, you know, and a mineral water. And I just, you know, that's kind of like a—

A flush.

Something like that.

A detox.

Yeah, like I call it a cold bomb.

A cold bomb?

Yeah, you know, like a flu bomb. Yeah. Those other things like, yeah. So I mean, it literally worked. I didn't go, I was supposed to go back to the gym yesterday. I haven't been to the gym much in the past, 3 weeks because of COVID and shit, but I hadn't gone at all. And then I went last week, a couple days of the week, but I was really like, okay, it's Monday, back in my routine. And just was a really shitty day yesterday, but I woke up today, I felt good. I felt, you know, I feel right, you know, rested. That's the other thing, like, I've been sleeping pretty good and shit. So it's like, I just, it just didn't make sense, like Just a very off day. That's what happens when you get old. That's what my dad told me. He said, man, that shit happens all the time.

It's just part of life, bro.

Get used to that shit.

It happens to me.

I was like, what? I just wake up and feel like you fucking got the flu again for no reason? It's like, yeah, you know, it could be allergies, could be something you ate.

Yeah, my allergies were bothering me horrible a couple weeks ago. I mean, my eyes were tearing.

So that's what I thought it was when I had COVID.

My eyes were tearing. You know what it was? It was that Sahara dust that we had.

It just got here.

No, we've been having it.

Just got here this weekend.

No, no, we've been having it for a couple of weeks now. It's been like on and off.

Yeah, you're right. But this weekend, it's gonna be bad. The week that just passed was like the bad weekend.

No time.

But I guess that, yes, you're right. It has been here since like the start of July.

All right, let's jump into some credit talk.

Credit. I ain't got none, so. I'll give you some.

So here's—

You know, I have one tip of advice. It's not even credit related. I guess it's a little bit advice. Somebody told me this a long while ago and I have not forgotten it. They said to me, they like, yo, if you're gonna go buy some, right, and you can't afford, you know, say you want a new TV, it's $370, blah blah blah, whatever. Now better yet, you want the new PlayStation 5. Okay, it's $480. Okay, let's say it's $500. If you don't have $500 to put into your savings, right, you can't afford that shit. Yeah, if you like, literally, if you can't buy two of them, right, you can't afford that shit.

Okay.

And I've got a way to look— that was some of the greatest advice. I mean, I've been using it even for like small things. Like, if this guy's yawning already, we just started the podcast. Jeez Louise, Papa Cheese. Anyway, so yeah, like, that's my advice for you. If you, if you can't If you can't put that money, the same amount of money that it costs for that item into your savings account, you can't afford that shit. Don't buy it.

Let's talk about things with credit. So things with credit, important things to do in the beginning, especially when you're younger. Okay, you're 18. It's time to start getting credit or whenever you've decided.

I was in prison.

Nope. Okay. The first—

I had good commissary credit though. I had my homie next door to me, a Native American guy. If I needed a couple bags of chips or some oodles, some ramen noodles, cup soups, till the next time I was good.

Okay.

I had good credit.

Okay. All right. Well, the first thing you need to do is get a bank account.

Okay, this is on to something.

The first thing you need to do, and you need to understand how to take care of that bank account so you don't overdraft. So you don't want to make sure that you sign up and you do not, and, and do not let them have the overdraft turned on because they did make a law a few years ago where you can opt in or out for overdrafting your bank account.

Yeah, that's just insane. Why would you want to opt out of that?

Well, if you had a savings account with some money in it, so you could—

You're asking a lot.

I know, but I'm just saying, if you did, otherwise opt out of that so that you don't bounce any checks and you don't charge too much on your debit card. And then you end up—

You opt in.

No, you got to opt out of the COVID of the allowing the overdraft. Don't allow them to overdraft your account.

Oh yeah, yes, yes, he is correct. You opt out of overdraft.

Because let's say you have $100 in your account and you go buy something for $150, they'll give you— they'll pay the $150, and then you owe them the $50 plus like $35.

Yes, for the overdraft fee.

So don't do that.

Don't ever do that shit.

Yeah, don't bounce any checks, because if you bounce checks, you get put on the poo-poo list, and then you can't open another checking account.

You know what's fun?

Because they have this thing called Check Systems.

Yeah, so when I was a shorty, Yeah, you just— it's just a little—

let me finish.

No, I just realized it would take me like 30 seconds. So when I was a shorty, uh, my godfather was supposed to pay me some money from painting, right? And so he didn't do it, so I went to the bar that he went to.

Yeah, and bounce a check. Okay, well, don't bounce checks.

So the owner Dave was so pissed. His name was Dave Waz. Shout out to Woz, man. He's a good, I paid him the money back. I gave him the money. It was only $400, you know what I mean? Like I didn't want to get, it was the check I was supposed to get from my godfather was a lot more than that. But yeah, he never fucking, I went in there, I bounced that check and I told him this is 'cause, it was 'cause of Cordell, man. But yeah, anyway, don't bounce checks.

So, you know, establish a bank account. Nowadays you can get a debit card, but the other thing you want to do is you want to get a credit card. So it's a lot easier today to get credit cards than it was years ago. Years ago, you had to fill out—

don't get a prepaid card though.

You don't need a prepaid card.

If you lose it, whatever money you don't have on prepaid credit cards where you put, you put $500 on there, I'm going to get— that shit is terrible idea.

So I'm going to get to that now. You want to try to get a credit card. Now, let's say they deny you because maybe you were in college and you don't have any credit. And sometimes you can put $200, $300 on deposit. And then what you have to do is you charge on the card, pay for your gas, pay for a little food. Again, make sure you can afford it. And then you can pay your credit card every week if you want. You should. Yeah, you should pay it every week or every 5 days.

You should pay it every time you get paid. You should pay your balance down.

Yeah, pay your balance down. So if you do that, usually those cards where you put some money, they'll send you an offer. They'll give you interest on that money and they'll hold that money for usually 6 months to a year. And if you've been paying on time during that whole time, You know, running transactions, paying, running transactions, paying.

Running transactions, adding money.

No, you don't need to add money to it.

Bullshit.

No, they don't make you add money. You talking about those prepaid debit, credit cards? It's not a prepaid card. It's just one where you get a credit card.

Oh, so you put a bunch of money. But you got a $300 card.

Right.

You get approved for a $300 card from Credit One or whoever. Capital One.

Can be from anybody. Most banks will do it and they'll say, oh, give us, and they'll pay you interest on your money. At the end. And usually you get the, you know, like my daughter had to do that. She was in college and she got her first job. She needed to have a credit card, so she got a credit card. She had to put, give, I think, like $350. And then after like a year, she called them up, said, okay, I've been paying every month my bill off. They gave her back the $350 plus interest.

Never heard of anything like that.

Yeah, that exists. If you have no credit, that's— sometimes you have to do that to get a credit card. Now, if you have— if you have a job and you have income and the bank— and you go apply for a credit card today, they can check your bank account. My daughter didn't have any income at the time. Her income was very limited, part-time job, but she had to have a credit card. Moving to a new city needs a credit card. And, you know, and that's how you build up your credit because they're not going to get— they always say, like, if you have money, you can get more money, right? I don't know. No, I'm just telling you, if you have money, everybody wants to give you money because sometimes it's cheaper to borrow money than it is to use your own money. Oh, so, you know, and, you know, and then obviously, like, let's say that's a good fucking problem to have. Yeah. Sometimes, sometimes it's cheaper to use, you know, use their money, not use your money. But, you know, you have to, you know, and then, you know, if you're, you know, when you want to, you have to establish— that's how you establish credit. But obviously you don't want to get overextended where you're just, you're charging, charging, charging, charging, charging, and all of a sudden you got 10 credit cards and you charged up $100,000 and now you dug yourself in a hole. So you don't want to do that. I know people who have done that. It's not a good idea. Amen.

I could tell you everything of what not to do.

Okay.

You should not max out your credit cards. You shouldn't get a credit card if you can't— you shouldn't just— if you don't have the funds to replace that money, don't do it. 'cause you're setting yourself up for a very long life. Don't borrow anything if you don't have a job and you don't know how you're gonna pay those bills. Don't do that. That's just a very bad idea.

No, but there's certain things like you wanna go stay at a hotel, you need a credit card.

No, you don't.

You could use a debit card, but they charge your card. And then you have to get— then they have to refund you money when you leave, or you go to a place that takes cash. Okay.

You don't have— I get what you're saying. If you want to rent a car, yeah, yes, you're going to need a credit card.

You're going to need a credit card.

I found that out the hard way. I went— I did the cash way, and that ends up being very, very expensive.

Yeah. So, you know, so get— having establishing credit, getting credit cards is important, but keeping all of that you know, just get one. You know, some people have two. You don't need 29 cards. You don't need cards from every single store. Like, don't get all these cards from all these stores.

If you— so the one thing that I will say, those are— if you're trying to establish credit, that's a good way to end. That's entry level.

Yeah, those are entry level cards.

Like, if you spend a lot of money at whatever, GameStop or whatever, Macy's, Macy's, wherever, you know, you need a you know, you about to start a new job and, you know, Boston Store offers you a credit card, you know, and you get approved. That's, you know, that's something that's a good, that's a good, good investment, I would say.

Yeah, those, those cards, those are good cards.

Stay away from Affirm. Do not get trapped in the buy now, pay later thing. I mean, it definitely for me has been very beneficial and helpful. Um, but you know, it is what it is.

No, that can be beneficial and helpful in some cases. In some cases, well, you just can't abuse it, right? You can't abuse it. Don't abuse credit. That's the main thing. Don't abuse credit, which is very hard.

You gotta have self-discipline, you know. I mean, shit happens, you know. I basically lived off my debit card, my credit card last year, so that's That's why it's maxed out.

So no, and you want to definitely have like, you want to, you know, you have to, you know, because if you're going to start a business down the road, you're going to need credit at some point. If you're going to start a business, if you're going to buy a house, if you're gonna— like, I was, what, I was, um, looking at this thing Built. It's this new credit card. And so there was an art— there was a couple of articles about the company about, you know, how that company was doing, how much money it was making or losing. Apparently, like, it's doing very well and attracting, um, people who are paying rent, right? And they're putting the rent on the credit card, on this Bilt card. But what the Bilt card was hoping for was that people were going to carry balances, but they're attracting people that have good credit scores, like 670 and above. And then the people are paying their rent and they're paying it off because they don't want to get in trouble. I mean, if you paid your rent 3 or 4 months in a row and then you're just making minimum payments, you're going to have a huge problem with— you're going to owe a lot of money. So those people are smart. The people who are using the card are using it in a smart way. Where they're charging their rent, then they're paying it off, but they're not using it for other stuff because— but it does have good benefits. It's got some, some reward benefit or cashback benefit for that card. But it's an interesting way on how to build credit. If you're paying rent, you don't own a house, you're building up credit, and that, that those payments are going to look good if you're going to buy a house, and especially if the house payment's going to be at or near that rent payment.

Nice.

So that's— I think that's a really good tool for young people. Didn't exist until recently, although the negative side of it was that the bank was not happy with the financial performance. I think that had to do with people not carrying balances.

Are you talking about Built, the actual company, though?

Not the actual company, the bank who backs BILT.

Oh, they're— yeah, well, yeah, they're not making enough.

They're not making enough money.

Right.

So it's not— I mean, you know, listen, I had a credit card. I used to pay it off every month. And all of a sudden, one month I get a note going, yeah, we're no longer going to give you credit anymore. I had to go get a new credit card for that credit card. But I try to put like, I know like how much my bills are. I just put everything on a credit card and I get the cash back or take, or I don't like rewards like miles because you could never get what you want out of that. At least not for me. I mean, if you're willing to change planes and do all kinds of crazy stuff to get somewhere, maybe it works for some people. Or if you're using like American Express. But you know, if you're just using like regular credit cards, just make sure you get one that gives cash back. That way at least you're getting something out of it. Yeah, you get something. It might not be a lot, but you get something. I mean, you charge, you know, I mean, some people just charge everything and then at the end of the month they just pay the whole thing off. So, you know, if you can afford to do that, then you can get cash back, or you can get my— like, I have one friend of mine charges everything on American Express, and then once a year at the end of the year, he's able to go on vacation on American Express. Takes all the points, you know, charges everything he can possibly charge.

My dad's that way.

And then he gets all the points, although they're harder to redeem now for, for for airlines want more points than they wanted before to get free plane rides, and the hotels want more points.

So real quick, speaking of airlines, did you hear that they're— the pilot shortage is over?

No. Yeah, so that's good. Yeah. What— how did they fix the pilot shortage?

Add marketing.

Marketing got more pilots.

We've got people to go to school.

Yeah, right.

So it's a great job. He said the only thing that they're having issues with is finding captains because you have to have 1,000 air hours, right? There's a lot of people that have that, right? But to be a captain, it's like, yeah, you gotta, you know, say you're in Miami and you're— you love your route that you fly and you're home every other weekend or whatever. No one wants to go and move to Arkansas for, you know, extra $20,000 a year. They're just not doing that. You know what I mean? Most people anyway.

Well, I mean, you know, the pilots used to be a lot of, you know, the pilots, they used to get a lot of ex-military because they have the experience of flying those, especially the guys who were flying the big cargo planes for the military. A lot of them, like I had a friend of mine, he worked for FedEx, he flew for FedEx, American Airlines, UPS. He flew for everybody for a while, you know, over the years. And then they start, they moved the retirement age down. They made a bunch of people—

Right, people just quit.

Yeah, they made people retire. Then they had to bring a bunch of them back because they didn't have enough pilots.

Right. Right.

You know, because it takes time. It's not something you can't just go, oh yeah, we want to have young pilots. Okay, well, where are you going to find all these people that know how to fly a big giant plane? Yeah.

And then anyway, I don't know. I need to get into flying.

Okay, well, we got into it because of Air Miles.

Yeah.

No, but if you're getting a credit card, get something that, you know, don't just use your debit card. Now, the other thing is, is credit card versus debit card. And consumer protection, right? So let's just talk about that for a second. So when you buy something, and Justin knows, on a debit card and something happens to that item, it can take a long time to get your money back.

Or you aren't getting your money back.

You had a situation where it took months before you got your money back.

Like a year almost.

So you don't want to do that. If you're going to buy something expensive, put it on a credit card. That way, if the item breaks, you you have some protection and you can do a chargeback. I do that all the time, especially if you think it might be iffy.

Yeah, you can't buy everything through Amazon, so, you know.

Right. Well, they sell a lot. I mean—

They do sell a lot of the stuff that you need, but, you know, if you are shopping and you see something online, just do your diligence, you know, read some reviews, check out the company.

Another thing to check when you're buying online is check where is this stuff coming from. So I didn't really get this whole stuff's coming from China directly, right? And I had bought something online a long time ago and I didn't look where it said fulfilled in the USA, right? Well, it turned out thing never showed up. 2 weeks go by, nothing. Another 2 weeks, nothing. Go back to the website, send a message, and they're like, oh, it's coming from China. So I end up doing a chargeback because I haven't got this thing. It's been 6 weeks. I get my money back. The funniest thing is, about 9 months later, the item actually showed up in the mail.

That's definitely happened to me before, and that was, and that was like crazy.

I was like, are you kidding me? Like That— because there was no tracking on the website. There was no—

not especially during COVID that shipping was terrible.

So now I check products all the time. Where are they coming from? Where are they shipped? Where is the company? I read like before I check out. And then if I see like, oh, it's coming from China, you might not get it for a few months.

For sure.

It could take 2 or 3 months to get that product. And, you know, now the banks are also super iffy, like on merchant accounts where there's fulfillment. They want to know where is the fulfillment coming from, because there's— they know there's no way you're fulfilling those orders within 30 days if it's coming from China or some other out of the US. So those are, you know, but it's, you know, when you're using— at least if you use a credit card, you can get your money back. You use the debit card, you might not get your money back. This is true. Or you have to fight a lot to get your money back.

Depending on the bank.

Yeah, depending on the bank. Yeah, but it's still—

Navy Federal does really— they're really good.

Yeah, I had charged something once on a debit card, never got it. Contacted the company, never heard back from them. And I remember it took me 2 or 3 months before I got the credit back to my account. But, you know, it's important to build credit, you know, and go through the steps of building the— building your credit, you know, getting a bank account, keeping it clean. Don't bounce any checks. Get a debit card and get your first credit card, whether it's one— maybe you can get one because you have shown good cash flow in your bank account and you have a good job and the credit company can see that. Because if you work for a bigger company, your income is reported more often.

Business credit is a very different thing. Yeah, it's a whole total different monster.

I—

we don't have time to really touch, right?

But you got to get personal credit to get business credit.

Yeah.

So that's our credit tips for the day.

Credit tips for the day: don't spend your money when you shouldn't. Don't, don't, just don't. Just keep your money.

Good credit can take you a long way in life. That's one thing.

Per Allen.

Okay, come on, for Allen. For anybody, doesn't matter who you are.

I don't know.

Well, you gotta have, get good credit.

You gotta get some money first, buddy.

Okay, well.

You gotta run that money up first.

Okay, run the money up first. Okay, learn how to establish credit. That's the big thing.

Some good advice. Don't, don't jack your credit up. So yeah, that's all I got.

Okay, peace out everybody. Carpe diem. Smash, like, subscribe, share. Let your friends—

smash, like, subscribe, and share. Yeah, smash the subscribe button, like, and share this. You really should only tell them to do one thing. Okay, so what do you want them to do?

Like— and okay, like the podcast.

How about you can like this episode or subscribe to the pod?

Subscribe to the podcast.

There you go. He wants you to share it with your friends if you feel inclined, right? Until next time, peace.

Peace.