According to entrepreneur and credit business owner Gladimir Du Bousquet, leveraging credit to acquire assets is one of the most important rungs in the ladder to financial success. With 2 years of experience in the industry, Gladimir believes that a foundational understanding of the contributing factors to establishing good credit is imperative to accumulating wealth.
No stranger to helping maintain, repair and improve the credit scores of the many clients in his business, Steps to Wealth LLC, Gladimir dedicates his effort to educating the masses on just how and why credit can be useful to the consumer. Today, Gladimir is with us to share his expertise in the credit industry and answer some important questions that can kickstart anyone’s journey to successfully leveraging their credit.
Gladimir, let’s start off with some background into your experience in the credit industry. Can you shed some light on your business and how you’re helping people?
My credit business called Steps to Wealth LLC provides education, tools and resources required to set yourself up for success when it comes to making credit work for you. We focus on not only helping our clients to repair their credit but understand the value behind leveraging your credit correctly to invest into assets.
That sounds great, Gladimir! Many people struggle with understanding exactly what credit is and why it is useful. Can you explain that for us?
Essentially, it starts with your credit score, which measures your eligibility for any kind of lending product, for example a credit card, line of credit or loan. To make it easier to understand you can think of a credit score like grades in school – the higher the better.
Most lenders use the FICO score model to score credit, which ranges from 300 to 850. Ideally, your credit score should be above 680 to be eligible for lending from banks. Your credit score also determines the interest rate you will be paying on your lending products – a higher score means a lower interest rate and therefore less money that you’re paying over time as you pay off your credit products.
Thank you for that insight into the credit system. Now that we have a better understanding of what credit is, let’s talk about what causes it to change. Can you explain the factors that contribute to a credit score?
Your FICO score is ultimately based on an algorithm. The algorithm uses different factors that are weighted with a percentage to give you your overall score – once you understand this concept, you really have the full basis of credit. The percentages are 35, 30, 15, 10, 10. The first and largest contributor to your credit score at 35% is credit history. Your credit score can be drastically affected by your credit history especially if you’re often making late payments or if you have accounts that have gone to collections.
The next 30% of your credit score accounts for credit utilization. An example of how this works is if you have a credit card with a limit of $1000, and you often use the entire $1000 limit or 50% of the limit, this would negatively impact your credit score. Usually, lower utilization of your products will help you to increase your credit score over time, for example using 20% of the limit or less on a monthly basis.
Gladimir, what do you think is a common mistake people make with their credit or credit products?
Unfortunately, a lot of people use credit in the wrong way because they don’t really understand it. An example of this would be using credit to buy liabilities. For instance, using a line of credit to buy a car or an item that’s outside of your financial means, creating consumer debt.
The reality is that we all like nice things, but you have to do the work first before you’re able to comfortably spend money on those things without creating financial problems for yourself down the line. When people use credit in the wrong way, it negatively affects your credit score. That’s why I really focus on educating people so that they know how to positively leverage their credit.
I’m sure you have many clients at Steps to Wealth LLC who work with you in hopes of increasing their credit score. Can you share some of your knowledge on the best ways for individuals to improve a poor score?
Since credit history accounts for the largest percentage of your credit score, paying your bills on time is crucial. It seems simple right, just pay your bills on time. It’s something that is easily overlooked, but paying off your lending products on time – over a long period of time – can have a big and positive impact on your score. Another way to improve or maintain your score is to keep your credit accounts open. People think that if they’re not using a credit product they should close it, but it’s much more beneficial for your score to keep the account open.
Lastly, don’t apply for a lot of credit. For example some people will apply at multiple different banks for multiple different credit products. So three main points are; pay your bills on time, don’t close any old accounts and stop applying for a lot of credit, and you should see an increase in your score over time.
Now that you’ve shared some tips for individuals to improve their credit score independently, how can you help an individual with a low score through Steps to Wealth LLC?
Before I even started my business I did a lot of research and educated myself on the consumer laws put in place to protect consumers, for example the fair credit reporting act, the fair debt collections practices act (FDCPA), and the truth in lending act. At Steps to Wealth LLC we use these laws to our advantage to help get negative accounts removed from our client’s credit reports.
Thank you for sitting down to interview with us today, Gladimir! It’s admirable that you’ve chosen a path as an entrepreneur to help people become more financially independent by understanding credit. I’m sure our readers interested in getting some assistance with their credit would love to get in touch with you. How can prospective clients reach you?
Yes for sure! Here is my website that I can reached from!
https://stepstowealthllc.com/home-3490
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