Why Credit Rules Everything Around Me | Financial Facts

There are a number of stats that most people are aware of when it comes to the severity of the wealth gap in America. For instance, the median wealth for white families is 6.7 times greater than the median wealth for Black families. According to a recent survey by Credit Sesame, about 54% of Black Americans report having no credit or a poor to fair credit score, which is considered to be any score below 640. About 41% of Hispanic Americans report falling into this category as well.

The importance of credit and lack of access to financial literacy can make people feel like the system is stacked against them. Yet, for Mickey Factz, his goal of creating tangible insights and projects that help to improve the level of creditworthiness amongst his community is of the utmost importance.

The New York rapper has spent the past few years building his understanding of financial literacy. Mickey’s quest for dollars and sense eventually led to a partnership with Kiddie Kredit, a mobile app that uses chores as a method of making credit easier to understand for children.

Now, we’ve tapped Mickey for Financial Facts, a four-part weekly series where he offers up personal advice around various money matters. As a follow up to his conversation on budgeting, here is part two, where Mickey doubles down to offer five facts meant to help you discover the importance of having and maintaining good credit.

Complex: Based on your experience, what foundation does one need to maintain consistency with their budget?

Mickey Factz: Credit, man. Credit is basically the foundation of everything—and I’m not just talking about having enough to get a credit card and swipe it. Credit is how financial institutions view us as responsible people in society. That’s all credit really is: “Can I trust you with this amount of money to pay me back and achieve your dreams?”

In my opinion, as I’ve gotten more knowledgeable on how to use credit cards, I believe they should be used all the time. There should be no need for a debit card, to be frank. Aside from a strip club, there’s no need for cash most times. Everybody’s exchanging money via FinTech, which is like Apple Pay, CashApp, PayPal, or Zelle. You can pay anybody you want that way and it eliminates the need to carry cash.

What should someone just learning about credit cards and credit reports consider before taking the leap?

MF: Credit is the building block to everything when it comes to finances. You can’t get a job sometimes if you have bad credit. You can’t move into a specific neighborhood if you have subpar credit. If you have great credit, you can walk into a car dealership, spend less money down on it, and get a car you want with a low-interest rate because they understand that you know how credit works.

Growing up as a Black youth, credit cards were for me to get fly with, as my friends were telling me that “cash is king.” Cash is king in certain instances, yes, but credit is the ace or big joker because when moving around in the financial world, using credit to fulfill your dreams is a major key.

How did your partnership with Kiddie Kredit come to be, and what impact has your financial journey had on the youth?

MF: Kiddie Kredit reached out to me after my freestyle on Funkmaster Flex’s show [about financial literacy]. They asked me to be a brand ambassador to teach lessons about building credit to kids aged 8 to 13. I thought that was a fascinating idea and chose to be a part of it because as a kid and a young teen, I wasn’t taught any of this in school. [Laughs] Instead, we were dissecting frogs.

Kiddie Kredit is a mobile tracking app that uses chores to educate kids about building credit. If they complete enough chores, they can show the results to their parents and “raise their credit” to make financial decisions with their allowance. But, if all you’ve done is ask for things, even if you’ve been doing your chores, you learn that credit is the same as with your credit report—by asking for too many credit cards, you can damage your credit as well.

I. Understand Credit:

It’s the secret to gaining access to money that will help you push forward your dreams, plus afford you opportunities to build your own business.

II. Learn What Debts You Have:

Healthy debt is important to one’s financial literacy growth, and learning which healthy debts you can use to increase your bottom line is very important. The bad debts that you have will give you insight into what you need to clear off your books before applying for a home or a credit card.

III. Educate Yourself About Compound Interest:

For those who don’t know, compound interest simply means earning interest on your savings, and also, eventually, on the interest that those savings earn. The earlier that you can learn this and impart this information onto others, the sooner they can earn compound interest of their own.

IV. Prioritize Investing:

In my opinion, investing is educated gambling, and with that, one should only put money into the market that you’re okay with losing. One to five percent of your money should go into saving for the month, to invest in yourself, and if you’re bold enough—take another $100 and put it into the market. You should always have money moving around in the event another GameStop situation should happen and you don’t miss out.

V. Forgo Fear & Embrace Risks:

It’s essential and imperative that people plan for the future, and there’s no time like the present to do so. You don’t want to have a surprise throw you off of your game, or end up in a precarious situation where now you’re packing grocery bags when you’re in your fifties and sixties because you didn’t plan for that moment. This is the time to shake off fear, embrace the risks that come with today’s opportunities so that you can relax on the beach when you get older.

Check back next week for part two of Financial Facts, where Mickey dishes sage advice on entrepreneurship. In the meantime, you can revisit part one to learn about budgeting.