Credit Card Passive Income

30% of your FICO

Credit card utilization makes up almost 30 percent of your FICO credit score. In other words, the illustrious 800 milestone is not achievable without them. Using credit cards responsibly is #lifegoals! Besides, why not take advantage of free travel, cashback, and rewards???

I’m a big fan of credit cards and I use them for passive income. Yes, passive income (money that you earn without active involvement)! Many banks offer rewards as an incentive for simply using their products. Rewards often come in the form of cashback, points, and miles. The banking world is an extremely competitive market and we as consumers are the grand prize. 

Let’s talk money…

American Express, Chase, Capital One, Citi, and Discover are my top 5 credit card issuing banks. These banks offer SUBS (sign-up bonuses) for most of their credit card portfolio that will suit every consumer. These bonuses range from $100 to 2,000 (subject to credit approval). There are minimum spend requirements for each card so please read the fine print.

A huge fear of applying for a card is to be denied and left with a hard inquiry. Trust me, I’ve been on the losing end of that plenty of times 😔.  So, how do we mitigate risk while taking advantage of current offers? I have created a list of 30+ banks that will perform a “soft pull inquiry” for credit cards and other banking products. This method will minimize the risk of being denied credit when you apply. 

Let’s be strategic…

You don’t want to be information-rich and strategy-poor. In other words, have a plan in place prior to applying for any credit cards. I offer a consultation to discuss your goals, credit profile and create a strategy for the cards that fit YOU. A few items to consider when deciding on a strategy:

  1. Review your credit

    1. 640+ FICO 8 scores will be accepted (for certain cards)

    2. AAOA (average age of accounts)

    3. Inquiries in the last 12 months

    4. New accounts in the last 12 months

    5. Derogatory marks

  2. Review your expenses

    1. Select your top 5 monthly/annual expenses

    2. Put them in a spreadsheet and sort (ascending)

    3. Should they sort by fixed vs variable expenses?

  3. Create goals in which you could use your credit cards for

    1. Vacation

    2. New equipment, computer, phone, etc.

    3. Gift cards

    4. Free airfare

    5. Free hotel stays

Disclaimer: The purpose of this exercise is not to accumulate debt. You should only spend what you have budgeted for that period. This money hack only works when you don’t carry a balance on your accounts. These cards are a tool to lavish perks when used correctly.

Sincerely… 

Jason