Saving Money AND Improving Your Credit

[james.hendrickson]

About a month ago, I got a call from a guy who had been offered the opportunity to start up a Subway Sandwiches franchise. The trick was his partners needed him to contribute $10,000, so he needed to save money. He also had bad credit. So he asked me how he could build up his credit AND save money at the same time.

Most of the time these are considered separate things. Right, so to build credit you can pay your bills on time, don't max out your credit cards, etc. etc. To save money you budget, cut expenses, and increase your income.

But, are there actions you can take that will kill both birds with one stone? So, What can you do that will both build your credit and save you money?

[thestrongprofessional]

Building credit and saving money

Hey James,

I think that you can definitely build credit and save money at the same time. However, improving your credit generally takes longer than saving. The big factors that contribute to your credit score are paying your bills on time and your credit utilization over time. Along with these factors, your credit history, new credit and your mix of credit all play a role. If the person you mentioned is committed to saving and making sure his/her bills are satisfied on time he/she will eventually achieve both his/her goals.

Raphael

[bjl584]

Someone with bad credit probably shouldn't be trying to open a restaurant. He may want to get his financial house in order first, then revisit this idea later.

[james.hendrickson]

Someone with bad credit probably shouldn't be trying to open a restaurant. He may want to get his financial house in order first, then revisit this idea later.

In this case, he was a manager at Subway, so he understood the business model already and I think his credit was like 650, not great, but not terrible.

It's a good question. I mean if you assume that 80% of your results come from 20% of your actions, then why not identify savings/personal finance activity that will improve both your credit score and boost your savings?

[bjl584]

In this case, he was a manager at Subway, so he understood the business model already and I think his credit was like 650, not great, but not terrible.

It's a good question. I mean if you assume that 80% of your results come from 20% of your actions, then why not identify savings/personal finance activity that will improve both your credit score and boost your savings?

It sounds like he is trying to save up $10,000 cash for this franchise, so I'm wondering why his credit score is even a factor here. If he was trying to get a loan, then yes. But, if he is saving cash, then his credit score is irrelevant.