Why use credit, and why does having a credit score matter?

Real estate is one of the best investments you can make, but not all of us have hundreds of thousands or millions of dollars just lying around to buy property outright.

>>1562502
Getting a low interest rate on a home loan is beneficial for your income stream, because it gives you more principal to invest and diversify your income. The same goes for all big purchases that you could use a loan for.

The way to get a good rate on these loans is to have a good credit score.

Using loans gives you far more range to accrue capital. Do you think people who rent out property to people purchase all of their houses in full? No, they can buy multiple houses and rent them out by having a good credit score.

>>1562508
Mortgage has its etymology in two French words, Mort for death and gage for chain but getting into that arrangement is entirely subjective and yeah, people need a roof over their heads. Upside down world. Credit rating should really be called a debt rating, credit cards debt cards, debit cards credit cards. Basically just a symptom of a debt based economy through fractional reserve banking as opposed to a credit based system which the world has never know and never will. Get now pay later has great traction to the huddled masses.

>>1562514
? Where are you getting at?
Credit cards essentially are debt cards. Debt isn't bad, so I don't understand where you're getting at. Reaching a percentage of debt that you'll no longer be able to pay off certainly is a problem, but debt isn't the problem.

>>1562502
Credit score are great way to get great interest loans I do live within my means anon. I just tie my bills to a credit card and pay it off every month and its all good. I get 2% cashback. I do save money but sometimes emergencies happen that would drain you out too far.
Like my car had died before I had enough in my savings to fully finance it so i had to get a loan for the difference. Paid the car in 6 months.

In Marxistland capital doesn't matter only production and the means of production. Have you tried living in that version of reality?

>>1562502
i'm not a burger, so credit scores don't apply to me personally, but having good opportunities to get credit is important if you use it as leverage. you can easily double or triple your equity if not more. the lower the interest rates the bigger your profits.

>>1562522
cc debt *is* almost always bad because it's used for consumption, not for investing. debt is only helpful if your profits surpass your interest payments. you have to compare opportunity costs between paying off your debt (or not taking it out in the first place) and your investment. and even if you used your cc to invest, there's next to no non-shady investments with roi surpassing cc interest rates. get a proper loan. ccs are for payment processing, not for credit or debt unless you're a sucker.

Leverage.

Nice to have some fancy credit cards, but the real answer is leverage. If I decide to do a 2 million dollar startup tomorrow, I can have the frameworks for it up and running within a week with maybe 10 thousand out of pocket.

>>1562618
No you can't. What banker is gonna lend you 2 mil? Unless you got it covered, no one is gonna do something that stupid.

>>1562822
Previous working relations, and the collateral of the project, maybe throwing in some collateral from another business or personal liability.

You don't generally get the entire lump sum of money up front. You have an agreement that more funds are made available as you hit certain agreed upon milestones.

>>1562508
This. Nor should u even. The new rich mans game is to own. Nothing but control everything. A good credit score is a flashcard glance at your crdibility as a borrower.

Good score, lower risk.

Meaning u get treated better, better interest, and more money. Its win win for all.

I highly suggest u pick up a few personal finance books anon. This queation is the first step towards millions if u are motivated.

See u on the other side of wagecuckism.

>>1562510
THIS.

UNDER

RATED

POST...
put it this way. U "legally game the system."

After all lnown bullshit repairs, appreciation, depreciacion, taxes, law suits, bills etc.... u take out a loan for 100k.

Say u can rent that property for 20k a year.

Say your total bills is 10k.


That is 10k per year seemingly forever. With large potential to sell for shit tons later. Very small risk of somehow losing it.

Say u have hundreds of these.

Boom

Multimilionaire.

Laugh when a few a year burn down or whatever and u lose because its as negligable as buying a pop at your current income.

Git gud yall.

Its not easy, bit this is no exageration.


I see it done daily.

>>1562822
True, but once u show competence, have a. Cosigner, or a solid business plan, then they are betting on your investment with u not just u.


"If u owe the bank a million dollars you have a problem. If you owe the bank OVER a million dollars then the bank has a problem."

>>1562822
I can go to the bank and get a couple million easily enough.

but yeah, I could cover most of that with collateral and I can prove that I've made millions in the past.

File: usury.jpg (56KB, 680x430px) Image search: [Google]

56KB, 680x430px

>>1562522
Debt is a problem in any monetary system especially where interest rates are unchecked. It's basic math, the interest and service charges create an ever mounting pile of debt money that soon eclipses the principle started with, this money must now be created from more debt. Sure you can run the printing press but this devalues the currency over time - if not there are huge defaults and stupid people lose everything, this is all well documented out there and these inflation - devaluation boom bust cycles are historically documented and often end in war. Many blame the Jews but usury has been around for thousands of years and used across all cultures with many horror stories attached to it. If you can handle it great, most people are ignorant and get in trouble though, they will drag you down with them every time for it all attacks the foundations of civilization and society itself.

>>1562502
Real estate.

Credit is a meme.

Oh, you're good with your debt? Congratulations! Since you're so good with managing your debt, please allow us to allow you to acquire even more of it.

Debt is not always bad. Credit cards are not bad either if you're not a fiscal retard and actually keep a budget. Interest rates on a credit card are so stupid high that no investment can cover that gap. I use credit cards for signup bonuses and then cash back. Very meager amounts compared to my income but it's still more than nothing considering I use them just like I would a debit. Just as an example, my wife and I both did a run on VentureOne cards. 20,000 miles signup bonus once you spend over $1000 within 3 months(note that's $1000 in expenses, not carried balance). We spend that anyway. 40,000 miles between both cards; we exchanged that for $400 in gift cards to our local gas station. Probably going to last us 2-3 months. Some other cards with similar benefits totaling about $600 in cash. Did this over the past 2 months. Ran out of bonuses to use, but hey.

Of course we keep very close track of our expenses(even cash, if we use it) and stick to a monthly budget. The cards are all paid off now before interest was even a thought.

So it's not all bad, just don't be an idiot about it.

>>1562502
It helps you purchase a home or get an apartment. It of course helps financing a vehicle which you should never do unless absolutely necessary. Other than that, nothing. Even retards who go bankrupt receive credit cards which are technically unnecessary if you have enough cash.

If you buy a house and live in it forever and have no more desire for real estate, credit scores are generally useless.

>>1563123
Regarding other debt. Car loans are dumb. I can't speak for people on /biz/, but most people don't even consider depreciation when accounting for "how much a car is costing them". You buy a car that will inevitably drop in value month to month(especially a new one), plus whatever interest you're paying on a loan, will suck you dry. Get used, pay cash.

Houses are different. Depends on where you live. If you really need to own a house for some reason, a good interest rate can be covered by some investments where it's not even worth paying off your mortgage early. That's a longer convo though.

>>1563101
You say that like it's a bad thing. Why?

Those who are responsible gain extra privileges above those offered to the irresponsible. Not a hard concept to grasp.

>>1562827
>collateral of the project
>puts up 0.5% of the total money
>>1562827
>collateral from another business i.e. >10k previously stated
lmao. Not in this financial environment. Unless you have connections or put up more collateral this is a pipe dream.

>inb4 that's why you're poor

>>1563132
Yep. Budget is everything. You don't need credit to fuck up your finances if you don't do that. Carrying CC debt over your statements is deadly. I learned the stupid way.

>>1563129
You're right about used cars being better value purchases than new ones.

You're approaching the financing angle incorrectly though.

Why would I pay 10 grand for a lightly used car in good condition when I can pay that 10 grand over 5 years at an interest rate that's less than inflation, and certainly less than a stock portfolio? Costs less, and may or may not have some limited tax advantages on top of that.

>>1563136
He probably said it poorly but no bank is going to just hand you money. You have to have a solid plan and projections to show them why it's a worthy investment for them. Like he said, they're not going to give it to you all at once. They can start off with a smaller amount and cut you off if you're not delivering. No bank would just toss you $2MM unless you were ready to use it TODAY.

>>1563142
I hear ya, but I really think it's a matter of taste. In the case of the one car I have a loan on, the depreciation is numerous times more than the interest I'm paying on it. Like a couple hundred dollars more when the interest isn't anything ($20? I'd have to look it up).

I think my argument more applied to paying interest on a new car where most people would inevitably be upside down on from the minute they drive off the lot.

>>1562502
It helps for your mortgage. Maybe a small business loan. Literally nothing else

>>1563136
It happens all the time in real estate, particularly commercial.

I'm parking a project right now for the winter, as planned. 3.5-3.8 million dollar development. Out of pocket expenses for me so far have been about 45k, and 1.4 million has been spent on the project. To get started, I spent ~22 grand, and the only reason it was that much was because there were some zoning problems due to some proposals to run a major gas line through the parking lot. Had to redesign a few traffic routes and such so that maintenance on the gas line wouldn't completely fuck up access to the lot for semis. That meant fronting an engineer a few extra thousand to run the math for drainage and things like that.

As I said, you don't get the money all at once. It comes incrementally as work is done.

>>1563161
See to me the depreciation is irrelevant. It's going to happen anyways, finance or not. May as well mitigate costs.

Not that I really sweat 10 grand for a used tacoma or anything like that, but if I have the choice of cash, or a loan that doesn't restrict my use or modification of the vehicle at 2% or less, I'll take the loan every damn time.

>>1563196
Well the way I track my net worth, I definitely include the vehicle as an asset(especially if it's offset with a loan) so I have to depreciate it, else I'm in for a good shock when I sell it.

Like I said, it's a matter of taste and how you deal with opportunity costs. For example, for something so cheap, I'd take the hit just to have the title in my filing cabinet so I can liquidate it whenever I feel like to a private party(rather than getting boned at a dealer). Just a matter of preference I guess.

Cars are not assets silly niggers
They're consumable goods unless you're talking collectable cars that might appreciate

>>1563210
I finance my vehicles through my credit union, and since I know them so well they let me just casually walk in and liquidate. They don't even care about being notified in advance.

If I want to sell, I just meet the buyer there, payoff whatever is left, pocket or write a check for the difference between the sale price and the loan, then call it a day. Only extra step is sometimes someone wants to have it inspected, so we meet at their mechanic of choice before going to the credit union offices. If the mechanic spoonfeeds me any bullshit I just walk away from the deal.

Well technically I usually have an employee handle this, but you get the point.

If someone has shit credit, their loan probably has restrictions about vehicle use and modifications, as well as repayment limitations, so this doesn't work for everyone. My loans don't have that, so not technically having the title is a very minor annoyance at worst.

As far as vehicle depreciation goes, I always just use the fair mileage rates. The limitations on depreciation are fucking tiny, and some of my vehicles move 40,000 miles in a year. Fair mileage not only gets you more if you aren't buying gas guzzling scrap heaps, but doesn't have the same arbitrary limits.

>>1563253
Yeah that's the one case (Credit Union) where I think it would be fine. Unfortunately, this vehicle is a remnant from many, many years ago where I did a lease to own and still paying for it(pay it off next month). CU is definitely the way to go, and I had considered it. Just too little to bother refinancing right now.

>>1563228
Assets don't always have to appreciate, you oaf, especially in personal finance. If I put $2k down toward a car for $10k and financed the rest, year later sell it for for a difference of $1k. I could say $2k was a vehicle "expense" and then later call the $1k what, "money back"? I use it as an asset on my balance sheet so I can see what one asset(cash) went to(other asset, car). By depreciating it over that time I can see I just simply took the $1k in equity and converted it back to cash. Much smoother for me and makes more sense.

>>1563253
Just reading your post again, surely the difference in our conversation is between business and personal finance. I was wondering what you meant about tax benefits from it ;)

>>1562852
Cool. Let me just take out 100 mil in loans

>>1563210
>just to have the title in my filing cabinet so I can liquidate it whenever I feel like to a private party
Who up and sells their car on a whim?

>>1563422
>2016 and not speculating yugioh cards http://yugiohprices.com

>>1563422
Well between my wife and I we have 3 vehicles, so one can disappear at any time and it would affect us. On a whim? If I really got myself into some shit, it could happen. Not likely, though.