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Do you find it hard getting credit/loans/mortgages as an IMer?

Discussion in 'BlackHat Lounge' started by deviatus, Jul 2, 2012.

  1. deviatus

    deviatus Power Member

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    A lot of us are in for the long game, and as you get older, these things get more important.

    Even if you put away a million a year, millionaires want credit/loans/mortgages too. Unless you want to be flush with cash, but living a poorer lifestyle than what you've earned, because you can't get credit.

    Have any of you had problems?

    A good tip is to establish credit history even if you don't need to. Take out a credit card, get those store credit cards, get a small loan even if you don't need it, but only if you have enough cash. People that loan money will take the doctor making $250,000 a year over an IMer making the same any day. That doctor will statistically still be a successful doctor in 10 years. An IMer might not. So you need to show that you pay your bills, and a lot more than one.
     
  2. stayley

    stayley Newbie

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    There's many different ways to build your credit, both personal & business credit. PM me with questions.
     
  3. CoyoteAssassin

    CoyoteAssassin Elite Member

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    I can already tell you what kind of reaction you will get from the bank when you go in to meet with someone who is making maybe $15/hour and you are making $xx,xxx/month. They will not understand when you try to explain it to them and they will think it is a very high risk and not sustainable.

    However... here is where most IMers go wrong.

    The govt takes too much money and wastes it - we all know that. So in return, we try not to pay all of the required tax. And as long as we are not caught or need a loan, that works for us. However, as soon as you go get a loan and you show the bank that you only make 2k/month instead of the 20k/month that you actually month (or any other number), you are no longer going to be qualified.

    It doesn't matter what you actually make. If you do not have the tax statements to backup your earnings for the past two years, you every need to pay cash or wait till the following year.

    Paying taxes is not fun knowing that there are many freeloaders out there celebrating at their mailbox at the first of da month.

    However... If your taxes are in order and you can produce a financial statement and all of the required documents along with a decent credit score, you can get approved.
     
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  4. Zapdos

    Zapdos Power Member

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    You also need to show income, and in the U.S. that means taxes. So you could fudge the numbers... in a way thats not in your favor. Claim more than you make and pay more. The other way is to form a company (such as an LLC) and give yourself a CMO/Chief Marketing Officer title and also make your own paystubs out from the company.

    All the benfits of a real job, solo :p
     
  5. CoyoteAssassin

    CoyoteAssassin Elite Member

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    Yes, you can do that. But you also need to have valid statements from clients as they will review them. Some of this can be fudged as you said and yes, you can fudge the numbers not in your favor and claim more than you really made. But why would you want to take out a loan that you are not qualified to buy?

    Some things are not meant to happen.
     
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  6. Zapdos

    Zapdos Power Member

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    Depending on what you apply for, the loaner will give themselves a very safe margin. If you could easily pay it off in 6 months (you know yourself better than the loaner) then they would likely give you rates as if you could only do it on a 24 month basis. Fudging the numbers higher is only useful for people who know what they can and cant do.
     
  7. kanewm

    kanewm Registered Member

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    It was tough when I was just starting out, but once I had tax returns in the 33% bracket it became easy ;)
     
  8. procam

    procam Senior Member

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    You invest your money, if you're a millionaire you won't ever need credit..

    Credit is for people that live above there means. If you're a millionaire, you should be the one giving out the loans and charging interest and living on the interest paid to you. Basically everything you said is void because if you have the money and invest it wisely, you'll never need credit..
     
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  9. wowhaxor

    wowhaxor Executive VIP Premium Member

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    I find it hard whenever I have to do anything (example I move a lot and like to rent places for 6 month see if I like the area). Everyone and their mom assumes high risk and just doesn't understand, forget that I've been doing this for a decade now...
     
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  10. CoyoteAssassin

    CoyoteAssassin Elite Member

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    Sounds like a Dave Ramsey student.

    Your comments are correct but that is assuming someone is a millionaire. I don't think Dave expects people to save up 150-200k to buy a house. Besides that, he says your house is an investment.
     
  11. Medic873

    Medic873 Newbie

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    I might not be a imer but when I started making quite a bit off my software and websites the first thing I did is go down to rent a center and purchase some stupid table on a loan just to help my credit having this in mind as a long term issue.

    Man that is one shitty table and I think I threw it away months ago but I am still paying 10$ a month on it with just the intent of it helping my credit

    Same thing with my car when I first purchased it I could have bought it out right but instead decided to get a loan that would cost me a extra 1000$ in the course of the loan just to help my credit

    Getting credit seems to cost alot lol
     
  12. zebrahat

    zebrahat Elite Member

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    Getting a conventional loan, consumer credit et al is exactly what keeps most people mired in unneeded debt, unneeded tax disclosures, and functional poverty (aka, paying through the nose each month for 'a higher standard of living'). What ever happened to living within your means, especially since you have the ability to make superb earnings through IM, unencumbered by loan expenses? Why would you want to take on the personal or financial liabilities of standard credit in the first place?

    As far as real estate goes, there are half a dozen ways to finance property that do not involve conventional loans (lease arrangements, options, equity sharing, literal or de-facto assumptions, created notes, hard money). No-statement mortgages were/are a legitimate lending alternative to the Orwellian, anti-privacy notion that "we must disclose data" packed into standard bank loan procedures---it's their standard, it doesn't need to be ours. Home mortgages as the main device for buying property is a relatively recent phenomenon in consumer history, a convention that the banks concocted a century ago to convert our real equity into their cash cows. We are under no obligation to perpetuate their money machine, so why do so?

    IMers should be thorough going in their replacement of conventional financial thinking, and not settle for credit or mortgages or other debt financing for big ticket purchases. Equity financing (savings, cooperative purchases, angel investors, stock arrangements, grants, etc) is an alternative we should be promoting as the new convention for our financial dealings, not the one-sided, self-serving products banks offer us. If you can slap back the Googles, you can slap back the Chases.
     
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    Last edited: Nov 3, 2012
  13. jilla2005

    jilla2005 Newbie

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    Kind of sounds a little hypocritical to me, that's a sad way to think.
     
  14. subster

    subster Elite Member

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    Building debts is just too easy. I could flip seeing people takeing those 'consume loans'. I never ever would go into debts for a vacation or something like that, never for anything fun related. My opinion is that you have to earn your specials, not to have everything right now, and then pay later. What state of mind is this? Only reason for loans are any kind of emergency, reasonable investments, where the Roi pays the debts, covers the fees and let you profit or other cases of really urgent needs. If you want something you have to save money not to lend it. This is what i am trying to learn my son and so much others in this generation should think also about that.
     
  15. scallen37

    scallen37 Junior Member

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    Never claim you are self employed. You are instantly a risk, and the lender will over analyze what you do. In the case of IM, the average teller or lender simply won't understand what you do.

    I got my first home loan by putting up expensive farming equipment as collateral, and then providing the lender with financial information from my bank in China and my job in China. They requested a bunch of forms that I would submit to the I.R.S. as proof of how much I made because I own a company in China as an expat. BTW, the I.R.S. is on a whole different level when it comes to collecting taxes from people who are U.S. residents but don't live in the U.S. and work in another country as well, but that's a story for a different time. I obtained a $120,000 home, I put 15% down and received a first time home buyer tax credit. I then financed the home to someone else 2 months later for $10,000 down + 10% more than I was paying in mortgage. They moved out a year later forfeiting their down payment. I've had the same thing happen to the same home 3 times, but the other 2 were people I had to remove from the property due to a breach of our agreement (several police calls, partying, minor property damage, etc), and for non-payment. I used the money from these to purchase a foreclosed home for $25,500, with about $2,000 invested in repairs. Then when I had 2 members of my family pass away within a year from each other, I obtained both homes which were modest $60,000 homes.

    The market in Iowa for homes isn't that great, so I really couldn't make money flipping homes despite what all of the shows on TV might convince people of. At 25, I own 8 homes. I haven't seen the full financial benefit of owning almost a million dollars in property yet because they money I could be keeping I mostly pay to someone to manage these properties while I live in China. Starting in 2014, about 80% of my income is going to be invested into property in Eastern Iowa and Western Illinois because I just started making about $8,000 a month from my other ventures and have some things to pay off before I can become all gung-ho about investing further.

    Anyways, the point of my long post is that I'm sure your could fib on documents and your source of income a bit to purchase a home that would make it more simple in getting approved for a home loan rather than jumping through a bunch of hoops required for someone who says they are self employed.
     
  16. BlueTurtle

    BlueTurtle BANNED BANNED

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    I don't understand why so many of you are having issues. Are you walking into a bank and saying you're an "IMer"?

    The whole "the $15/hr bank clerk not understanding IM" thing is just irrelevant and ridiculous. A $15/hr bank clerk isn't going to understand any business and they're not the ones who make a decision. The decisions are made by a computer based on your accounts/credit rating/application data and nothing else.

    I suspect the problem is that many of you just haven't been making the $xx,xxx/mo consistently. I often see people say they make $1k/day because they had a single $1k day and the rest $200-$300.

    You should have your own c-corp or Ltd company in the UK with a good trading history and have been giving yourself a sufficient salary. You can't just apply for loans as an employee without disclosing that you're a company directory and shareholder, but you stand a much greater chance of getting a loan as opposed to just being self-employed.

    If you've been running a profitable business for 2-3 years and giving yourself a salary then a bank will have no problem giving you a mortgage/loan.

    This whole "I'm making so much money and the bank just doesn't understand IM" is nonsense. Money is money. The bank don't care what it is you do. All that matters is your accounts.

    Also, if you're making 5 figures per month, especially for several years then why on earth are you not using a private bank? Who walks into a public bank and speaks to some $15/hr bank clerk when they're doing close to or more than a quarter million a year?

    The public arms of the banks cater to the masses and have computerized systems making instant decisions and thus have zero flexibility. That doesn't work for the business owner who has a £500k/year business and a £20k/year salary because he keeps money in the business.

    Even the most exclusive private banks, like couts, only require £500k net worth in the UK.

    You can opt to go with the "private" arm of the main banks. Natwest for instance has a private division for people making £100k/yr or more. You'll receive a much more personal and flexible service that looks at your entire net worth and business including your assets and a decision is made on an individual basis.

    I just find it hard to believe that people have been making significant money for years and are struggling to get a loan. IM is business, nothing more, nothing less. Self-employed tradesman making $50k/year with ups and downs in accounts will struggle to get a loan. An online media company turning over $200k-$500k+ per year will not.


    How can you "claim more than you make"? Do you think the bank just ask you what you make and take your word for it?

    You need to produce several years worth of accounts. You can't fake anything.

    That's called fraud if you don't disclose that you own the company.
     
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    Last edited: Nov 3, 2012
  17. BigBuddy

    BigBuddy Account Under Review

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    Very hard in my country (India), even after showing my tax returns.

    I use to go for private finance companies, where interest rate will be more than banks. These private finance companies process faster by just seeing my bank statements. But I use this loan for any business purpose, which provides good ROI. Its not advisable to take loans for any entertainment purpose.
     
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  18. Zapdos

    Zapdos Power Member

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    In the U.K. maybe. In the U.S. the banks don't all operate the same. If you go to a large one (wells fargo, boa for example) and apply for a large loan then yes you will have problems. The size of the loan in same banks cause it to go higher up the food chain for review. With the smaller ones, I just need to call up the local manager and ask for it. Then a few minutes later the money is in the account. Also, I've only been required to produce up to 2 years proof of income. Not 3 or more.


    As above, in the UK maybe. I've not seen, heard or otherwise been told that its required by law. I'll be sure to ask my CPA and lawyer next time.
     
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  19. BlueTurtle

    BlueTurtle BANNED BANNED

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    Call up a manager and ask for it and have it a few minutes later? Doesn't sound like an experience that's common with the public banks.

    Well, in the UK if you apply for any credit and put down that you're a salaried employee but fail to disclose that you're also the company director then it's called as fraud.

    I really doubt it's legal in the US otherwise anyone could just register a company and say they have a job.

    If you have a full time job in the UK then you only need 3 months wages, where-as if you own the company it has to be 2-3 years. That's why you have to disclose the information.

    But in general your advice about 'fudging' stuff is highly irresponsible information. That *is* fraud.

    I don't know how the US system works, but you make it sound like it's super easy to get a loan.
     
  20. Zapdos

    Zapdos Power Member

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    It's a small regional credit union limited to family of service members, those in the service or retired. So it's definitely not a public bank, but still fairly open. Expecting that from the big banks is useless, they'll ask for you and your parents house as collateral for a $5 loan :|



    Just increasing the amount, yes. Though I do recall seeing a popular finance blog or news site ~2 years back with a way to increase them legally but only to a limited amount. Similar to the other thread about google being sued for tax evasion in France; do it a certain way and its legal. Just a loophole. I'll see if I can go dig it back up.

    Far from. With major banks you need a flawless credit score. No missed payments, no bankruptcies, nothing that could even hint you may not make a payment. Even then you'll probably get screwed on amount and rates. That's why I have an account with a smaller credit union :p Much easier to get in contact with support, managers and other people. Better rates and they dont charge me per month to have an account or $40 per overdraft.
    Though it seems not many people know that financial institutions other than Wells Fargo, BoA and Chase exist. Especially credit unions.
     
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