To potentially become more fundable and get the best rewards approval out of our credit line, we have to align ourselves with funding behaviors. We also have to keep in mind the nitty gritty in the documentations that come with it. Merrill Chandler discusses how you should go over your fine print and find out what they’re going to hold against you if you do certain behaviors.
Watch the episode here:
Listen to the podcast here:
Best Rewards Approval Ever
The Fine Print That Almost Killed Me
I talked about how F*able I am. Remember, we talked about the problems that I had with my business credit identity, my BCID, and how it was not reconciled with Dun and Bradstreet, Experian business credit reports and on the state. I’ve handled a bunch of those things on the state and my team has been assisting me. We’re teaching our clients how to do the same things. We did an instructional video for everybody to be able to use who’s part of our coaching crew, our clients, as they make themselves more and more fundable. I wanted to bring back to you the results. We clicked that button and said, “We’re going to have to get back to about this answer.” I got an approval notice for $59,000 on my application. Personally, I was blown away. I’ve never seen an approval from a new institution at that amount. That means that I’m doing the right things. That’s our objective, to get you to those same elements. I haven’t gotten a $50,000 approval. Technically it was $75,000, but that was between two credit instruments.
We talked about that. From Wells Fargo, it was $50,000. This is $59,000 in a credit card. That was $50,000 in a credit line plus a $25,000 credit card from Wells Fargo. They gave me the terms and agreements and I want to go through some of these so you understand how are you going to watch for what they’re trying to offer you and what you need to do to be successful. The first thing we’re going to go through is let’s talk about what they mean by guarantee. They’re welcoming me to the account and they say, “Based on your creditworthiness, you may need to provide some financial support to us to initiate or maintain your account. If we, in our sole discretion, deem such financial support necessary, we will notify you of the type and amount of the required financial support.” By financial support, they mean financial documentation, financial proof that what I put in my application is true.
I know the game. I fill out all the application information so that it reconciles with not just the proof documents that I would provide, but what’s on the databases that they’re going to source in to verify automatic underwriting. We know that I got bumped into manual underwriting for that particular thing, but it was based on my addresses, not on my financial data. What they’re saying here is that at any time, we can ask you for proof documents to show that you’re not fooling around. The issue is you’ve got to be prepared for those. More importantly, you’ve got to run the traffic patterns on any new credit instrument, especially for the first 90 days.Credit payments received after the required time will be credited the next day and will be considered late #GetFundable. Click To Tweet
You need to run certain traffic patterns that are going to inspire their algorithms, not make them afraid. You want to stay away from that 40% utilization or 40% traffic number to stay out of the risk department. This risk department is going to be looking for you to start burning cash through this card. Interestingly enough, part of my Southwest program was I have to spend $5,000 over the course of 90 days. $5,000 is only 10% of a $59,000 account. If I charge it all up in one month, I’m going to be safe. Everybody is different, but you’re usually safe if you run traffic at 10% to 20%. I’m going to be safe to spend those dollars.
We’re going to be okay talking about merchant fees and how rewards work. We’re going to get into those smoke-filled rooms with cigar-smoking guys and how they’re paying for all these rewards points. I got 70,000 points. Those points don’t come for free and there’s a reason why they want us to run $5,000 in the first 90 days. It’s to award me those points. The next thing I want to talk about is what they call the payment due date. This is so important. They have it on the documentation. What’s underlined? Payment due date. What they say is payments are due on payment due date shown on your monthly statement. The monthly statement also explains when the payment must reach us in order to be considered paid as of that date. Payments received after the required time will be credited the next day and will be considered late.
What they’re saying is you have to pay by the date and time. This is important for you to find out what the due time is on a particular day. We’ve had clients whose credit card issuer said the due time was 5:00 PM Eastern. If you’re in California, that’s three hours earlier. We’ve talked about this a little bit, but that three hours early, that means you have to pay your bill in California by 2:00 PM or you’re considered late. Your payment’s going to get popped to the next day. I’m going to show you the next place where it says you’re in default if you’re one day late. In the default section, it says, “Your account will be in default if you do not pay at least the minimum payment when due.” That is the date and time. If you are late one day or you’re late by one hour, you are in default. They say this later, but they do not have to say you’re in default at the moment.
They reserve the right to call you in default a year ago. If they suspect any untoward activities, anything that’s causing them in the risk department to want to lower your limit or close your account, they can look back even 24 months. I don’t know about further back than that. They may. If you are in default anytime, they reserve the right to use that against you at any time. Default is if you do not pay at least the minimum payment due by the due date and time, but not late. “If you fail to comply with this agreement or any of our related banks, you’re in default on this card.” Any related banks, you’re also default. They’re also saying, “If we believe you may be unwilling or unable to pay your debts on time, you’re in default,” if they get evidence.
The next one says, “If we obtain information related to any material adverse change in the business operations or financial conditions of the company, you’re in default.” You’re talking about petitions for bankruptcy or you become incapacitated or die. You’re in default and they have the right to close the account. As a side note, that’s why we don’t want joint. Because if something happens to you, we want that credit line to die with you, not leave you or your spouse or your family members or partners with debts to carry. We’ll be getting into the survivorship and debt carry over on joint account. You are in default if you don’t make the date and time or you failed to comply with any of the banks or they believe you are unwilling or incapable of making a payment.
How do they know that you’re unwilling or incapable? They’re going to say, “If you go late on any other payment that is being registered, not just on your credit report, that collects all the real-time data.” With the early warning systems, there are numerous databases out there that are collecting this real-time data on you. If any one of those accounts goes late, they can call you in default because they will say, “You’re incapable of paying because you didn’t pay X, Y and Z bill.” In my case, Chase can say, “You didn’t pay Wells Fargo.” Just a 30-day late, regardless of the reason. The longer you have the card, the more chances they will get to keep you. Because remember, lenders make money when they lend. They will keep you if you’re 3, 6, 12, 24 months to have this card. They may not pull the rug out. I’ve already given you stories previously of clients who literally went and charged it all up or put on an authorized user that had bad juju. They closed down the card because all that happened within the first 30 days of getting the card.Do not pay attention to the marketing. Pay attention to the instrument itself #GetFundable Click To Tweet
There are rules to this and that’s why if you haven’t done so, go to the bootcamp. Get a deep dive, find out how fundable you are with the bootcamp worksheets that we do. GetFundable.com, click on the bootcamp button. If you are going to get my book, I cover the book. It’s free for you. You just cover the shipping. Whatever it takes, get as much of this information and continue to binge these. They’re going to look for evidence that you are unwilling or incapable of paying your bills and they’re going to call you in default. We don’t want this to happen. The next thing is nobody reads the four pages of all of this document, but I do because this stuff is my jam. You don’t have to, that’s why I get to geek out and I do love what I do so that you don’t have to.
With payment instructions, it’s the same thing: date and time. We covered that one. The last thing that we want to cover is what they call payment instructions. They refer to date and time and then if you are going to default, they say we don’t lose our rights. The next thing is the payment allocation. When you make a payment, generally we first apply your payment to the balance on the monthly statement with the lowest APR. Let’s say you did balance transfers. That has a higher APR. Cash advance, that’s a higher APR. Whatever money you pay, they’re going to apply it to your lowest interest rates. Let’s say mine’s 17% in change for just regular purchases, but it’s 22% for balance transfer and 26% for cash advances. 29% is the default rate. We’ll cover that one in a second. Payment allocation says that they’re going to pay off your lowest interest balances first, then anything above that with the next lowest interest rate.
Finally, if you’re paying more money, it’s the next lowest interest rate. If you have $2,000 in purchases and you have $500 in a cash advance or a balance transfer. Those higher rates for the cash advance or the balance transfer of $2,000 and you make a $500 payment, you’re still getting charged that higher rate for the cash advance and the balance transfer. You got to pay off the $2,000 with your money before you can even come close to touching those higher interest rates. They’re stacking it against you and they want the higher charges first. Finally, the last thing that I want to cover is what they mean by the default interest rate. Default interest rate means that if you are in default, it can go from the 17% change all the way to 29.9%.
I don’t know if they did this intentionally but look at the language. Default interest rate could mean an automatic interest rate. It’s the one that you default to. The secondary meaning is that if you default, this is the interest rate. Both of them have serious implications. The thing that is most important to you is if you are one hour late in making your payment and your payment gets posted at any time after the due date, they can charge you in this case, 29.9% for the rest of the time that you have the card. You can ask them about good behavior, otherwise, you can always call up and request a lower rate, but they don’t have to give it to you. They’re basically saying this card comes in at 29%. We’re going to give you a promotional percentage of 17% for purchases, 22% for balance transfers and 26% for cash advances. We can’t charge you more than 29%, but if you mess anything up whatsoever, we’re going to charge you 29%. It is vital.
Many of you have known that I encourage you to put automatic payments on the due date. Some people have asked what happens if that dates on a weekend? If you have set up for it to be paid on the due date, every bank I’m aware of does that transaction on that date. It may not clear the bank until the following Monday or next business day, but you will authorize them to draft. If you have any questions, call your bank and ask them that. To my best understanding, it is the policy of the banks that if you give them permission to draft your account and it doesn’t bounce and you can pay it that way, then you get credit for it on that due date. Yes, I got $59,000 on my credit card.
Also, another thing I want to tell you is the credit access line. Notice how we talk about credit lines, credit cards? I have a Southwest credit card. They call it a credit access line. Remember, we’re defining our terms as credit charge cards and credit lines with specific definitions. Whatever their marketing condition is or otherwise, we’re not paying attention to what they’re calling it as part of their marketing. Because the word ‘access’ is borrower leaning, borrower facing. It’s an easy way to make you feel good about what you’re doing. Do not pay attention to the marketing. Pay attention to the instrument itself.
That’s what I got for you in this episode. It was a win. I believed that I was going to get approved, but it went to manual underwriting because of my BCID, Business Credit Identity, but I got a massive credit card limit and I love going over the details. Go over your fine print and find out what they’re going to hold against you if you do certain behaviors. Remember, everything is about aligning ourselves with funding behaviors. These behaviors, they’ve told us how to behave. If we don’t care, we don’t deserve to be fundable. Let’s make sure that we do this right every time.