Start Your Wealth Creation

by Putting Yourself into the

Best Starting Position

Contents
Page
1.

What Area do I start my Wealth Creation in?

3-5

1.a

Property

1.b

Stocks and Shares

1.c

Internet

1.d

Intellectual Property

1.e.

Business Owner

1.f

Business Investor

2.

Where do I start?

3.

Why does my own mind matter?

4.

Can I create Wealth Alone?

5.

Credit Issues

7 - 12

5.a

Why should I worry about my credit rating

5.b

General rules and myths about credit rating

5.b.1 General
5.b.2 Credit Scoring

8
8

How will the lender work out if they want

to lend to you

5.c.1
5.c.2
5.c.3

9
10
10

5.c

Credit Reference Agencies

The Application Forms
Past Dealings with the lender

5.d

How do I maintain and improve my credit rating

11

5.e

How can I get leverage if my credit rating is low

12

1.

What Area Do I start my Wealth Creation in?

Probably the most daunting initial thought that you have which as you now look
around will often become even more difficult as further opportunities open
themselves up to you.
So lets look at a few options:
x
x
x
x
x
x

Property
Stocks and Shares
Internet
Intellectual Property
Business owner
Business Investor
1.a

Property:

Over 50% of the UK top 100 Rich list made their money with property, of the
remainder, they have all eventually invested in some form of property, either
residential or commercial. Despite the current media perception on property, as a
commodity it has still produced phenomenal wealth historically, and over the last 60
years has shown a steady doubling return every seven years, despite the previous falls
in the early 80s and 90s.
It is a product that offers great variety, from Buy to let, refurbishment, multiple
letting, holiday letting, commercial investing, self build and developments. Your
involvement can be passive to fully hands on with the right knowledge and the
investments can also provide both cash and capital in the short term and the long term.
In essence property is a great vehicle, if you know what you are doing.
1.b

Stocks and Shares:

Fewer individuals have made their wealth through the stock markets, but almost all
will have some form of investments in the markets. Most individuals use a broker to
deal with their portfolios, these will generally then look at their risk levels and will
trade or purchase shares accordingly. The markets are a great asset to have in an
overall investment portfolio as they can provide long and short term gains, they are
far more liquid than property, but unfortunately with out the knowledge you trading
will be far more speculative or in the hands of another.

1.c

Internet:

Cheap and easily simplistic to begin generating wealth from the internet in what is a
growing and still young market. The dot.com bubble burst quite a while ago, but there
are still some great opportunities. From an initial Wealth creation scenario, you could
simply start by trading on EBay, or set up a web site with Google ads. With greater
knowledge and understanding the opportunities for generating cash flow increase
significantly, but also do the synergies with other businesses or enterprises that you
have. The only outlay initially is your time and your education, but the wealth
potential is infinite and unending.
1.d

Intellectual Property

Ever written that book that you know is in you, or created something that can be
utilised by others again and again, but at a price. Mix this strategy with the internet or
other business avenues and you may create a cash flow for years to come.
1.e

Business Owner

When individuals look at their life and discuss one of the things that they need to do,
it is almost always own and run their own business. That is because most individuals
believe that true wealth is created this way. However yes and no is ultimately the
answer, since firstly you need an idea, then you need to make it into a business, then
make it profitable, then either have the system run itself or sell the business.
Running your own business however is one of the greatest educations that an
individual will ever undertake, not because of learning about business but also
learning about oneself.
In starting a business we need to understand that most fail within the first year, not
because they are bad ideas, but because the individuals setting them up put too much
emotion and not enough business practice into the venture. If and when you embark
on this endeavour learn about the elements of business, strategy, man management,
marketing, accounts even the law. Yes we need to employ the professionals for us, but
to do that we need to know what we are looking for and also to understand the basics
about what they are talking about.
Finally owning a business is actually all of the other wealth creation ideas, since when
you start in property, stocks and shares, the internet or other areas, and then you must
look at these ventures as a business, not a hobby.

1.f

Business Investor:

The true wealth creator finally gets to the point where they understand about money,
about time about leverage. When you get to this point you realise that often the best
way to create wealth is to invest in those that will make it.
This approach will give you the best use of your time, will spread your risk as you
invest in many avenues and will give you a very impressive income stream. You can
take monthly or yearly dividends, and you can even wait for when the business really
takes off to sell your share and take a handsome capital pay off.

2.

Where Do I Start?

We make our own decisions on what we want in live; on how that can be measured
and so we all understand where we want to be. What is often difficult is how to start
getting there, but quite simply, if you are reading this book then you have already
started, because it is with your own mind that wealth creation is actually achieved.
We all know this, we all understand this, but what we still need to learn is often how
to make our mind think and work in an entrepreneurial manner. We need to see the
world as a positive place with plenty of opportunities and very limited negative
aspects. We need to see the good that all events give us, even if at the time we see the
negative. Ask any successful individual and they will always tell you about what they
learnt when their first business failed, or when they lost a deal.
We all speak about how we could have done better or how we would change things if
the opportunity came around again. Well learn from that; just make sure that you
create the opportunity again!

3.

Why does my own mind matter?

Many individuals write about motivation, about Positive mental attitude, about that if
think you will be successful then you will be. The cynic would simply say that this
makes them successful but that it will not work for the average person; well the cynic
is therefore correct. Because you need to be that successful person, you do not want to
be that average person, so in essence you do need to read, learn and act on what these
individuals are saying.
Your own mind is at the end of the day the most impressive asset that you own and it
works every day successfully. Learn to trust it, but also learn to appreciate it and as
such look after it. We where all born with an inquisitive, yet surprisingly risk aware
consciousness. It is over time within the realms of our initial mentors that we learn to
control or dampen down or even hinder our entrepreneurial, or adventurous or
creative thoughts. Is it therefore natural that as we have been educated in one way, if
we are to revert back and look at solutions rather than issues, see the positive aspects
of life, and not be afraid and embarrassed by success, that we will need to re-educate
ourselves in the process.

Go to any book store and you will find biographies on the rich and famous, why not
read them? Read about Sir Richard Branson, Donald Trump, Peter Jones, and Robert
Kiyosaki. Go back and read Napoleon Hill Think and Grow Rich, read about the
man in Babylon, even review the One Minute manager series. They will all pass on a
nugget or great piece of information that will help you start and be successful at
creating your wealth.

4.

Can I create wealth alone?

Of course. But everybody accepts that be successful is a lot easier and often quicker if
you work with others in some form or capacity.
True investors and entrepreneurs know that business relations are what make them
successful. Surrounding yourself with others that push, pull and force you along is
where true success comes.
We should find out what we are good at, and do that. Then find others that
complement you or can do the jobs that you cannot. Work with these individuals, it is
a relationship a business partnership but it is ultimately how success is often achieved.
Recently on BBC 2s The Dragons Den, there was an idea by a contestant, the
dragons loved it and so 2 of then teamed up and competed against two others to work
with the contestant. These are remarkably successful individuals, but what they have
learnt is that success is easy and more enjoyable if shared.
In sport there is no such thing as an individual, since all the top sportspeople work
with trainers. They need that individual who pushes them, who gives them guidance
when needed, encouragement and often abuse when required. Tiger Woods, David
Beckham, Michael Phelps probably the greatest ever Olympian have all used and
when asked have praised their trainers and mentors.
On the journey to wealth creation we should never be afraid to ask for help, never be
afraid to take guidance, to learn from others and to share our ideas and aims. Join
networking groups, surround yourself with like minded individuals, with those that
have achieved what you aim for and get these individuals to work as your mentors.
To help you on your way, the following chapters on credit are therefore included to
practically start you on your way. They are a guide, a helping hand that when you
fully understand about credit you will see that this lesson was not only invaluable, but
can also be passed on to others.
When you have created your wealth and become successful, your true measure of
success will then appear in your ability to help others start or achieve their aims.

5.

Credit Issues

The power of investing is generated by the power of leverage. To enable you to be

able to leverage as well as possible, you need to begin by understanding the credit
industry, how it works, and how to make it work for you.
5.a

Why should I worry about my credit rating?

Contrary to what our grandparents and parents thought, credit is essential if you are to
survive in todays life, but also if you want to progress financially in todays society.
Even today there are parts of London where you can not park your car by using cash;
the only way to pay is by using a credit or debit card. Stay in any Hotel throughout the
world and they will request a credit card swipe before you get your key. This is alien
to traditional beliefs, but nowadays almost everybody not only has but actually needs
a credit card
Even to get on the property market, with prices where they are you will need a
mortgage, it is not uncommon, but a reality.
With both of the above there is one element that is even more important today,
especially with the Credit Crunch and that is your credit rating. Without it the
institutions have no references to use in order to agree any credit for you, and with a
bad credit rating the answer will certainly be no.

5.b

General Rules and Myths about Credit Rating

5.b.1 General: Credit ratings do not operate in the way that many believe
there is no central database used by lenders or agencies to determine whether they will
grant you credit to help provide that finance for the future. Each lender will often
score you individually based on its wish-list for the perfect customer. This is not to
say that the agencies do not share their information, or that they will often cross
reference with agencies such as Experian, Equifax, or Call Credit. But initially they
will look at their own parameters of credit scoring.
5.b.2 Credit scoring: How the institution will initially look at you as an
individual. Whether you are trying to buy via HP, sign up a new credit card, or even
register for a mobile, the ability for you to obtain the credit will relate to how you
match the lenders criteria on credit scoring. This will be the companys risk-based
number crunching attempt to predict your likely behavior from a vast range of data.
These lists are rarely made available to the general public and will often differ from
lender to lender but will be the internal mechanism by which the companies will asses
your potential to sustain the credit commitment and the ability to repay. Naturally,
depending on the size of the commitment, this will relate to the potential threshold
that the company will set.
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Credit blacklists are essentially a myth; there is no definitive list that circulates around
that all lenders or organizations will adhere to. Any situations that have occurred in
relation to you will appear on the overall agencies such as CCJs or missed payments,
but these will not automatically hinder you from gaining the approval or the possible
credit required. It will be the lenders decision whether you match their criteria, and
this relates to the credit score as previously discussed.
Hence, some organizations actively advertise that individuals with poor credit, CCJs,
etc., can still achieve the lenders approval. What will undoubtedly happen though is
that the lender will offset the added risk by requiring higher deposits or attributing
higher interest rates.
5.c

How will the lender work out if they want to lend to you?

The lender will look at a number of criteria

x

Your individual credit rating universally held with Equifax or Experian or

another other agency that they will utilize.

Your credit application.

Past dealings with lenders

5.c.1
agencies.

Credit reference agency files: At present there are three main

You can apply directly to the three main credit agencies, which are Experian, Equifax
and Call Credit or use a web-based service such as www.checkmyfile.co.uk,
www.experian.co.uk, or www.equifax.co.uk.
Lenders will often use one of these agencies when making their decision to lend to
you. These agencies compile information allowing them to send data on any
individual to prospective lenders. A main source for this information is electoral rolls.
These are publicly available and contain address details and data about who lives with
whom. The agencies also consult court records, County Court Judgments, and
bankruptcies to see if you have a history of bad debt. Other vital data that appears on
these reports comes from the financial institutions themselves, banks building
societies, and utility companies who have compiled data on all your transactions and
payments.
On the report the different agencies may place different emphasis on the different
recordings and as such you may sometimes appear as great in one report but only fair
on another. Within the reports however both will place emphasis on what credit you
currently have and how you are managing this. The reports will show any missed
payments, late payments, but also show when you have cleared debts.

One tip on getting a great report: is to actually have a number of credit cards. If you
show that others are prepared to lend to you, but are in a position that you have only
taken 20% of what is available to you then you score will rise. This is because you are
portraying yourself as financially astute; you understand money and know how to use
it.
It is therefore not uncommon for the reports to give you a great score when you have
a lot of credit cards.
What most individuals fail to realize is that the traditional approach as taught by our
grandparents, will unfortunately work against you here. Since if you have never
borrowed any money, then there is no evidence to report on. You can not get a score
if nothing happens. It has been recorded where individuals who have never borrowed
money before or owned a credit card have then been refused mortgages, purely
because the finance house has no evidence to make its risk assessment.
5.c.2

The application forms.

This is often the primary source of information lenders use to obtain details of your
salary, family size, personal location, homeowner or not, and reason for the loan.
These forms are however diminishing in their importance which can be seen by the
size of the forms. Large forms that take time to fill out were seen to be preventing
individuals from applying, and although the lenders want to avert the risk they are still
in the business of lending.
The Credit Crunch in 2008 has however seen this process reverse itself. The
instituations are still in the business of lending, but have lowererd their risk
thresholds.
When looking at these forms, there are a number of actions that individuals should
watch and try and perform.
Be careful when filling these out to avoid errors, if you earn 50,000 a year, check
you did not write 5,000. This would probably put a block on the application straight
away, and failed applications along with misleading information can have an effect
later on which we will cover.
Try to ensure that you have used the same data that has previously been used on other
applications, especially if you are applying to a company that you have dealt with
before. In this area, an address or other credit facilities are essential. Often the lender
may cross reference with one of the other credit agencies, and if details do not match,
they may often thus cancel the application. This even relates to postcodes and house
numbers. Specifically for the younger generations, ex students who on one application
registered a previous address. They may have only stayed for a short time and thus
later on with another application omitted this address. If picked up, lenders may
become nervous as to why it was omitted and subsequently block the application.
It is therefore advisable that you take a copy of an application and subsequently use
this as the blueprint for any further applications.

5.c.3

Past dealings with the lender.

Where allowed as data protection rules do govern this. But again, as discussed
previously, it is essential to make sure that the application matches those that have
previously been provided. The lender will also look at your own internal record, what
previous borrowings you may have had your ability to correctly manage these
borrowings in the past, and your ability to communicate with the lender in the past.
x
x
5.d

How do you manage your credit rating?

How to prevent credit fraud.
How do I maintain and improve my credit rating?

Work at it constantly, do not be afraid of credit, but certainly understand the

difference between good credit and bad credit. Regardless of your position, to be
successful in investing and wealth creation you must use other peoples money; the
greater the leverage, the bigger the returns (although the greater the risk, technically).
If you have never had credit, why would somebody lend to you they have no
information on you; they have no past history, and as such have no evidence other
than you have never had credit before. Chances are that they will lend because of the
latter reason, but again they are likely to charge you a higher interest rate compared to
somebody with a good credit rate and history.
When you take out credit, always ensure that you are in the process or have the means
to ultimately pay it off. As an individual, you too should have a balance sheet, like
any business; keep it in the positive and you should always have the capability to pay
of the credit. So to improve your rating, you need to be proactive in building your
rating. Start to pay your monthly bills by direct debit, set up standing orders for
payments, and show that you are a sensible lender. Take out a credit card, use it and
pay it off each month for a while, guess what will happen they will offer you more
credit. But when you set up the card, set up a direct debit for the minimum payment as
well. This will ensure that you never miss a payment or are late for a payment; you
will continue to build your credit rating and will not damage it.
When building your credit rating, remember to learn to play the system. You cannot
avoid it if you want to be successful, but you can learn to work with it and actually
make it work for you in the future. Just be careful of some of the tricks that the
institutions will play to try and catch you out. The banks and credit card companies
have been looking at ways of clawing back all the money that they have failed to earn
from the customers who learnt the system. Outcome: Learn the new rules and learn to
manage your cards better.
Many of the cards that have been offering 0% interest on purchases and balance
transfers are now providing new rules on slip-ups, such as failing to settle monthly
bills on time. This will then disqualify borrowers from the 0% rates, a fact many
customers do not realize, and will often result in the company reverting to the basic no
frills higher interest rates.
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One particular credit card company has also changed its completion times for
payments from 12 midnight to 12 midday. Failure to pay the required installment by
1159 and the company will revert to the full interest on the outstanding balance.
Also just because the interest rate is 0%, regular payments still need to be maintained.
These will be minimum payments, but miss them and the credit card company will
probably revoke the interest-only period. To never miss a payment, make sure that
you request that the card takes a minimum payment each month via direct debit. Not
only will this ensure that you never miss a payment, but it will also increase your
credit rating.
5.e

How can I get leverage if my credit rating is low?

Lenders are in the business of lending; they do not make money by keeping their
borrowings in the bank, and they need to lend to do so. Individuals can therefore
always find somebody to borrow from; what will cost is the level of interest.
Therefore, leverage should not be the issue. The issue will be the rate at which it costs
you, and therefore the ultimate profitability of the borrowings.
Look for areas that can help with lending but without charging huge sums for the
privilege, one area for example is credit unions. These are financial co-operatives
which are owned and managed by their members. Each credit union has a common
bond which determines who can join, usually an area or workplace. They encourage
regular savings and offer loans at very competitive rates to savers, without the need to
be credit scored, which can be advantageous if a borrower has a poor credit rating or
has too many searches on their credit file. In some areas, mortgages are available.
Visit www.abcul.org for more information about credit unions.

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