Gen Z Guide to FI

I have opened 5 credit cards in the last 6 months to pursue travel hacking as my passive side hustle. I have earned the equivalent of $3,450 so far towards travel. My credit score has fluctuated a lot since I started but I told myself that if the score drops to a 720, I will pause until it improves.

But before we deep dive the fluctuations, what the fuck is a credit score? A credit score is a number between 300-850 that determines your behavior with borrowed money. In summary, how likely are you to pay back money when that you borrowed? Your credit score is tracked through loans (e.g student loans, mortgages) and credit cards.

There are several factors that have a significant impact on your credit. Here they are:

• On time payments: BIG deal, pay on time (and in full to avoid high interest rates)!
• Credit Utilization: BIG deal, make sure you limit your credit card usage to 30% of your credit. Example: if your credit card lets you use $10,000 each month, make sure your bill is less than $3000.
• Age of credit: medium deal, significant impact on your score in short term but continuous on time payment offsets it.
• Number of lines of credit opened: medium deal, not too much impact on your score.
• Credit Inquiries: any time you open or close an account like in my case, banks will do a hard inquiry on your credit to see what type of customer you are. Expect your score to drop. However, as long as you keep paying on time and managing utilization, your score should improve.

Ok so back to my score, my score started at a 760 last December and is now at 714 after 6 months of opening credit cards. The chart below shows my credit score against the dates I checked my credit. The table on the side shows the dates that I opened each new card.

I have been harping on the power of travel hacking and I’ve gotten a lot of feedback about the impact it has on credit. I am not too concerned about my credit score but I do prefer it to be above 720 so I will wait till it recovers.

Paying a card late has the highest impact to your credit score. Paying only minimum payments helps your credit score but puts you in debt. That is a no-no, fire babies. If you are going the travel hacking route, plan to pay off credit cards on time and in FULL.

I am planning to do a review of each card I’ve opened since I started this journey. Stay tuned for that. If you have any credit questions or travel hacking questions, feel free to leave a comment and follow @genzfirebaby on instagram for more.

xoxo Gen Z Fire Baby 🙂