Mo Rafi founded Rafi Credit Consulting Inc, a private consulting firm based in Toronto, Canada.
He’s spent over a decade in Canada’s Banking Industry. Here are 4 global Banking Secrets he learned that most people simply just don’t know about.
Secret 1) Having more Credit is a good thing
Normally, when people think of Credit, they think of Debt. The reality is, the higher your credit limits are, the higher your Credit Score will be.
This in turn will lead you to the absolute lowest interest rates in the country. This also leads to special promotions, limited time offers, and the ability to negotiate a great deal when getting other banks to compete for your business.
Whenever clients are Pre-Approved for Credit Products, Mo always recommends, “be sure to read the fine print, but realize the more products you have with a particular bank, the better it looks for your financial report card, your Credit Score.”
A note of caution: With such high credit limits, it does get tempting to go on shopping sprees, or going on lavish vacations. The key thing to remember here is be responsible!
Secret 2) Good Debt is a powerful tool
Even in today’s low interest rate environment, people are shocked when they learn how to use “good debt” to their advantage.
Given the rate of inflation is sitting at above 3% pretty much all over the world right now, using debt to invest (where the rate of interest is lower than 3%) is now a strategy even expert advisors are suggesting to their clients.
Mo Rafi teaches his clients one important rule, when using “Good Debt” to make more money. It’s absolutely crucial to understand the cash flow that will be generated from that particular investment.
Whether it be rental income, dividend income or private lending income, it’s important to understand how much money is going to be coming in every month.
Then, it’s best to work out the interest cost or expense that’s going to be your responsibility, every single month. If the numbers work out to be positive, then congratulations! You have yourself the green light, to use debt to create income.
Secret 3) Bank Marketing is not financial advice
This is a big one. Often times, we as consumers feel the Bank is there to “help us”. Although that may be true, use caution. Banks are heavily geared towards product pushing.
Although some products in the banking world can increase your credit score, and put you in a fantastic place financially, a lot of Bank Products are just in general not worth it!
It’s important to do your own research, first and foremost. Make your own decision as to where you want to be financially. Then seek professional advice from that stand point.
Secret 4) You as a client have all the power
Whether it be young professionals just starting out in their career, or experienced investors buying their 9th investment property, everyone gets intimidated when speaking to their bank.
People tend to have this image of the Bank, having giant sacks of money in the back of their vault, deciding everyone’s fate by either approving or declining people for their dream homes.
People have a love/hate relationship when it comes to their financial institutions.
The best advice I can give Mo says “If you know the rules, you have all the power”.
The reality is, banks are publicly traded financial institutions. They have strict guidelines to follow whenever they are approving or declining a file.
When it comes to bank decisions, there is in fact a human element to the approval process.
But what’s more important is, every decision is based on a sort of “Credit Algorithm”.
If your Credit Profile is optimized, you understand what criteria generally leads to an approval and you’re motivated to get the best deal that’s out there, then you have all the power.
Mo encourages people to get educated and understand these concepts, to get the most out of your money to not only meet but exceed your money goals.
