Digital Social Hour: Leveraging Credit Cards to Fund Your Next Big Idea with Kyle Cowans (DSH #1328)
Release Date: April 15, 2025
Host: Sean Kelly
Guest: Kyle Cowans
Introduction
In episode #1328 of Digital Social Hour, host Sean Kelly engages in a comprehensive discussion with financial expert Kyle Cowans on the strategic use of credit cards to finance entrepreneurial ventures and personal ambitions. The conversation delves deep into understanding credit scores, improving financial health, avoiding common pitfalls, and leveraging credit responsibly to fund significant projects.
Understanding and Checking Your Credit Score
[00:00 - 01:14]
Kyle Cowans emphasizes the importance of comprehending one’s credit score and its impact on financial decisions. He suggests reliable platforms for pulling credit reports, such as MyFreeScore, MyFreeScoreNow, and AnnualCreditReport.com. These resources provide detailed insights into payment histories across all three bureaus and allow for frequent monitoring without waiting extended periods.
Kyle Cowans [01:14]: "So take advantage to see their credit report with those two resources."
Improving Low Credit Scores
[01:19 - 03:14]
When faced with low credit scores, Cowans differentiates between negative items (like late payments or bankruptcies) and a weak credit profile lacking sufficient history. He advocates for:
-
Building Credit: Utilizing credit builder accounts, such as those offered by Self, which report to all three bureaus without increasing credit utilization.
-
Repairing Credit: Addressing negative items by settling debts, making full payments, or employing reputable credit repair services.
Kyle Cowans [02:41]: "Seven years for late payments, certain bankruptcy, like a chapter seven, which is a liquidation, that's 10 years. Wow."
Recognizing and Avoiding Credit Repair Scams
[03:14 - 05:27]
Cowans warns listeners about the rise of fraudulent credit repair companies exploiting economic downturns. He highlights red flags to identify illegitimate services:
- Unrealistic Promises: Guaranteed results in an impossibly short timeframe.
- Lack of Transparency: Poor communication and vague claims of progress.
- No Contracts: Absence of formal agreements detailing services.
- Upfront Payment Demands: Requesting money before any service is rendered.
Kyle Cowans [04:21]: "So one of the first things you want to look for for a credit repair company, that could be a red Flag is the fact that they're promising results based on the Credit Repair Organization act and FTC. That's illegal in itself."
The Five Elements of FICO Scores
[06:15 - 07:52]
Cowans breaks down the components of the FICO score model, which include:
- Payment History (35%): Ensuring timely payments.
- Credit Utilization (30%): Maintaining usage below 10% for optimal scores.
- Average Age of Accounts (15%): Demonstrating longer credit history.
- Credit Mix (10%): Showcasing the ability to manage diverse credit types.
- Hard Inquiries (10%): Limiting applications to 0-2 to avoid appearing desperate for credit.
Kyle Cowans [07:15]: "The thing you want to focus on is how your credit profile is built, right?"
Other Credit Scores to Be Aware Of
[08:25 - 11:17]
Beyond the standard FICO scores, Cowans introduces listeners to:
- MyFICO Auto Score: Specifically used by auto lenders.
- MyFICO Bank Card Score: Influences credit card pre-qualification.
- Insurance Score: Impacts home and auto insurance premiums.
- LexisNexis Risk Review Score: Used by landlords and for banking checks.
He also touches on business credit scores, primarily focusing on Paydex, Experian, and Equifax scores.
Zero-Interest Business Funding Cards
[11:17 - 12:17]
Discussing financial tools, Cowans explains the benefits and risks of zero-interest business credit cards:
- Pros: Facilitates business growth, manages cash flow without immediate interest.
- Cons: Potential misuse for personal luxuries rather than business needs.
Kyle Cowans [11:23]: "If you have a genuine idea for a business marketing plan, a strategy... but like all these things in hopes and to pull people in, but that's not the way to go."
The Role of AI in Credit Management
[21:54 - 23:03]
Cowans shares his positive experiences with AI tools like ChatGPT in simplifying credit repair processes, such as drafting dispute letters. However, he cautions that while AI can enhance efficiency, it cannot replace the need for personal education and understanding of credit laws and tactics.
Kyle Cowans [22:10]: "AI is phenomenal. When you do things like Metro 2, however, you still need to understand what your rights are."
Maintaining and Monitoring Your Credit Score
[24:06 - 24:35]
Consistent monitoring of one’s credit score is crucial, even when not actively seeking credit. Cowans recommends using free credit monitoring services to stay vigilant against identity theft and unauthorized activities.
Kyle Cowans [24:12]: "Your score should matter all the time. But obviously, if you're not using it, it's not going to hurt you."
Late Payments and Legal Strategies
[26:31 - 27:25]
Addressing late payments, Cowans discusses legal avenues to dispute inaccuracies based on case law, such as the Richardson vs. Fleet Bank case. He advises leveraging these laws to challenge erroneous late payment entries on credit reports.
Kyle Cowans [27:03]: "It states that the creditor who's reporting a reporting allegedly late has to provide you internal records... if you go arbitrate and they make you provide that information now you run into a breach."
Leveraging Credit Cards Without Fees
[31:55 - 34:35]
Cowans elaborates on methods to utilize credit cards for cash-like transactions without incurring fees:
- Buying Groups: Engaging with select merchants to treat purchases as legitimate transactions rather than cash advances.
- Partnerships with Bank Firms: For larger amounts, collaborating with specialized banking firms to convert purchases into funds without traditional cash advance fees.
Kyle Cowans [32:30]: "They're treating it as a purchase, there's no cash advance, there's no daily interest points too."
Responsible Credit Use vs. Debit Cards
[15:30 - 19:25]
The conversation contrasts the merits of credit cards over debit cards, highlighting:
- Debit Cards: Lack of fraud protection and recovery options.
- Credit Cards: Offer security, rewards, cash back, and travel perks when used responsibly.
Cowans advocates for using credit cards instead of debit to maximize benefits while maintaining financial discipline by paying off balances monthly.
Kyle Cowans [18:28]: "Use your card instead and just pay the balance off of what you use that you were going to use with cash anyway."
Closing Thoughts and Contact Information
In the final segments, Cowans and Kelly discuss the significance of credit in achieving financial milestones such as purchasing homes and cars. They emphasize the importance of proactive credit management and education.
Cowans invites listeners to connect with him via Instagram at @money_hacker for personalized advice and tips.
Kyle Cowans [35:02]: "They can reach me on Instagram. That underscore money hacker. And I'm there daily."
Notable Quotes
- Kyle Cowans [07:15]: "The thing you want to focus on is how your credit profile is built, right?"
- Kyle Cowans [22:10]: "AI is phenomenal. When you do things like Metro 2, however, you still need to understand what your rights are."
- Kyle Cowans [24:12]: "Your score should matter all the time."
Conclusion
Episode #1328 of Digital Social Hour offers listeners a detailed roadmap to understanding and leveraging credit for personal and business growth. Kyle Cowans provides actionable insights into credit management, warns against common scams, and highlights innovative strategies to utilize credit responsibly. Whether you’re an aspiring entrepreneur or looking to bolster your financial health, this episode serves as a valuable resource for navigating the complexities of credit.
For more information and personalized advice, reach out to Kyle Cowans on Instagram @money_hacker.