How to Use Your Credit Score for Wealth Building | Steve Pate Shares His Strategy

Steve Pate (00:00)
Anything that’s at 800, that’s just such a magic number because I guarantee you most of the underwriters don’t have an 800 credit score. So now you’ve already got all these green lights, you got these green flags, the underwriters are like relaxed. They’re like, okay, he already has an 800 credit score, this should be a pretty easy deal.

Michelle Kesil (01:53)
Hey everyone, welcome to the Investor Fuel podcast. I’m your host, Michelle Kesil, and today I’m joined by someone I’ve been looking forward to chatting with, Steve Pate, who’s been making serious moves in the financial literacy space. So really glad to have you here with us, Steve. I think our listeners are really going to take something away from how you’re approaching

financial education. So yeah, let’s dive in.

Steve Pate (02:27)
Nice, thanks for having me, Michelle. Appreciate it.

Michelle Kesil (02:30)
Of course, first off for people who may not be familiar with you and your world, can you give us the short version of what your main focus is these days?

Steve Pate (02:42)
Yeah, of course. So I’m the founder of an online community called The Wealth Society. And essentially what we advocate for is financial literacy. So whether you’re an entrepreneur, real estate investor, startup, whatever it is, we want to make sure that you have the right tools in the tool chest to make the right moves at the right time. And a lot of that just comes down to awareness. Now, like even my own financial journey,

I can look back, you know, doing deals that I realized I should have been using a different tool. And so a lot of it is just making sure that people have an awareness of what they have access to.

Michelle Kesil (03:24)
Yeah, absolutely. And can you expand on some of those things that people should have an awareness on?

Steve Pate (03:24)
Yeah, that’s what we’re doing.

Yeah,

of course. you know, the wealth society is just, you know, our community, our product is truly what we call the 800 to empire. And so kind of starting at the beginning, we stand on the four pillars of wealth, which we call the ICAT. It’s income, credit, assets and taxes. They’re completely interwoven.

You can’t really play with any of them without the others if you want to achieve true wealth. know, an example of that is, you know, if you have an income stream, you’re going to pay taxes. And that’s great. You could make a lot of money, but you’re not truly going to achieve wealth because you’ve got money going out the tax side. And especially if you’re a W-2 employee, you can only make so much. You’re still trading time for money, no matter

you know, no matter how you chop that up. So the awareness piece, the educational piece there is that learn how to leverage, learn what credit looks like, especially in the U.S. because the access is incredibly easy if your structure is set up properly and then know your asset classes. You know, what assets do you know, like and trust? You know, if you’re a real estate guy, awesome.

don’t be messing around with car washes too much. If you want to learn car wash and, know, laundromat and some of those systems,

cool. I mean, there’s a time to diversify, but kind of like one thing at a time so that we make sure we’re getting a good ROI, especially if we’re leveraging. So we advocate to leverage. We advocate to have people understand their credit and actually use it so that they have access to capital.

Because access to capital is what gets deals done, right? So the beginning of that is even having people, it’s really learning that your personal credit score is your superpower. You don’t even have to use it. You’re using it more than anything else to like co-sign for business credit. But we teach people how to use business credit, how to use it properly.

Michelle Kesil (06:12)
Yeah, absolutely.

Steve Pate (06:36)
and not, I’m sure, you know, if you guys are on Facebook or Instagram, there’s all kinds of ads for 0 % credit cards and accessing cheap capital. That’s like the 10 % of what we do. Above and beyond that, we really teach people how to access and structure and build their companies so that they always have access to capital. Because 0 % cards,

six months, 12 months, 18 months max, then what? Then you’re paying 20, 28 % if you’re still holding that capital on those cards. So we teach the transfer, we teach the 10 year plan as far as how to always have access to capital, how to revolve it, ⁓ banking relationships as far as how to build those, how to maintain them.

how to be the round peg in the round hole so the banks know you, like you, love you, want to give you money, trust you, all the things, right?

Michelle Kesil (07:41)
Yeah, absolutely. So a lot of the audience is investors.

How can they leverage this formula?

Steve Pate (07:53)
So, I mean, the beginning is always realizing that, I mean, a lot of investors, it seems like there’s no gray area. They either have a goods credit score and they may know how to use it, or ⁓ they’re doing a ton of subject to deals because they’ve been taught that you don’t need a credit score, you’re using owner finance, which is great.

but then you still get stuck. What are you gonna do when it comes time to refinance and you wanna pull money out of that property? Now you can sell it and you’ll make money, but if you’re actually trying to build wealth, it’s not just about selling assets, it’s about holding assets and creating legacy and generational wealth, in my opinion at least. So for us, it starts with…

Not that we’re credit guys and that we want to be credit guys, we’re not, but it’s part of the equation. And so 10 % of what we do is make sure that people really understand at a granular level how their credit score works. What builds it, what tears it down? And the reason that we’re doing that is that until you build…

a company, an LLC, a structure to where you can get non-personally guaranteed money, which we teach as well, but it takes, you know, four to six months to accomplish that. So, but if you wanted to grab the fast money, it comes down to a personally guaranteed deal that you’re making with the bank. It could be a credit line, it could be a credit card, but it’s using your personal score to leverage into a business platform, showing people that… ⁓

you know, essentially if they have the true number, the true credit score is 780, but there’s psychological advantages. If a credit score comes in front of an underwriter at the bank, let’s say I’m trying to do $100,000 line of credit and I’m in the underwriting process,

they pull my personal score. know, mine’s crazy good because we understand the system. You know, I’m always 845, 850, but

Anything that’s at 800, that’s just such a magic number because I guarantee you most of the underwriters don’t have an 800 credit score. So now you’ve already got all these green lights, you got these green flags, the underwriters are like relaxed. They’re like, okay, he already has an 800 credit score, this should be a pretty easy deal.

So we have the psychological advantage and that’s why the course literally we named it 800 Empire.

leveraging your personal 800 credit score, teaching you how to get it there, teaching you how to maintain it, and all the forks in the road, all the left and right turns during that journey, how to maintain it, keep it, leverage it into big business credit, and talking numbers like, just on a credit card, you can get 300 to 500,000 really easy if you follow the coaching, but then with your LLC to get credit lines,

You can partner with 10 banks and get a $100,000 line with each bank. That’s a million dollars. That’s nothing to sneeze at if you’re trying to do deals.

Michelle Kesil (11:52)
Yeah, amazing. That’s a lot of value. So you mentioned that there’s like those forks in the roads that you help people overcome. What is an example of something that people might have an obstacle with and how to overcome it?

Steve Pate (11:53)
Yeah.

So most of the obstacles are people understanding where they’re going. So they have to set a goal. Because if you’re doing real estate deals or if you buy, like, we have to know what kind of assets that you’re after so that we can set you up accordingly. ⁓ A lot of it comes down to utilization. You know, just like on your personal score, your business score,

If you pull $100,000 like a credit line, there’s going to be a UCC filing. So we walk you through what that looks like and how to build that company to handle $100,000 debt on the books. Because once that’s filed, the banks can see it and other banks can see it. So like that’s an example of, you know, I’ve had people

move too fast or not follow the coaching because they go into the bank and the banker looks at them. We’ve already built them up to an 800 plus credit score. Their business is structured properly and the bankers are commission based. So they’re like, hey, not only can I get you these credit cards, but I can get you this credit line as well. Well, that’s great. if that’s the amount of money that you need, then good.

But if you needed to keep going, let’s say they were offering you 150,000 or 200,000 and that’s your goal, then you’re in good shape. But if you needed 500 or if you needed 700,000, as soon as that credit line goes in, that gets filed, a UCC filing goes in, and what ends up happening is that now it’s reported. So you have utilization.

And so other banks are going to shy away a little bit because not only are they going to be in second position, but they want to see if you can service that debt. So they’ll still lend to you, but they might want to wait four months, six months to make sure that you perform. It’s no different than on the personal side. If you buy a house, your credit score drops temporarily. You make three payments. They realize you can service the debt and everybody’s happy. Same thing with a car payment. You buy a new car. Suddenly there’s new debt.

that’s being reported, it affects your debt to income ratio, and your score drops temporarily. You start to service that debt, it becomes an aged account. Once again, everybody’s happy. So it’s knowing people’s goals, working with them on an individual basis, and really seeing them, not just putting them through a cookie cutter course, really sitting down and saying, okay,

Let’s talk about your goals because there’s gonna be, just like I said, I don’t wanna harp on it, but there’s gonna be those forks in the road that I wanna get you around. And I want you to be aware of them

so that when you get to it, you know exactly what to do and you don’t get into analysis paralysis where nothing happens because you’re worried that you’re gonna make a mistake. You have the confidence to move forward.

Michelle Kesil (15:53)
Yeah, that’s so important. What is like the most common like obstacle that you find people get into?

Steve Pate (15:54)
God bless the Lord.

So there’s two. I think the biggest obstacle is when people come in, if they have any issues with their personal, ⁓ it takes time and effort to clean those up. ⁓ It’s all doable. Everything is fixable. There’s an amazing amount of government agencies and bureaus that help us. ⁓

not only clean the credit, make sure that things are being reported properly with all the bureaus. So in the US, we have an immense amount of protection as far as our credit goes and being consumers on the retail side and on the business side as well. So that’s one of them is just having people clean up.

any mess that was made a year ago, two years ago, whatever the case may be. The second one is structure. Having LLCs or S-corps or C-corps or whatever structure you have, having it set up properly so that the banks ⁓ like it, understand it, smile, trust, so that when they are releasing funds, they know that it’s going to come back because your structure is set up properly.

And it’s, there’s a lot of people on here, if they’re already investors, they’re going to think that that’s, that’s super simple. And most of the time it is, but it’s amazing how many things fall through the cracks. Like literally, um, I had this, I just had this happen last week. Um, it sounds incredibly simple, but I had an address on a client, an address on their, their main address was California, um, on their personal credit report.

⁓ on one of their New Mexico LLCs, instead of using the California address, which you can do, they were using a New Mexico address. It was probably a virtual address. It might have been a resident agent. I’m not sure, but they didn’t match. So as soon as everything, that’s super simple. That’s like not a big deal, but now we have to go back, clean it up with the secretary of state, refile the EIN numbers with the IRS.

and make sure that everything is apples to apples. Because the data points that we have with the banks, you can get, like you don’t even have to be in front of an underwriter if everything is apples to apples. You can get automated money just spit out because you are able to get through their system, know, without being put in front of a human underwriter. That’s normally the best because it’s, you know, it’s like everyone’s gone into Chase or Wells Fargo or any of the big boy banks.

They apply for a credit card and five minutes later they have a 10, 20, $30,000 credit card. It’s because their profile didn’t hit any red flags. Their addresses matched, their income matched. They already were a known client with that bank. That relationship was already intact in place for six months a year.

money, you know, transactions had taken place. So the bank already knew that it wasn’t a fraudulent or potentially fraudulent account. So all those data points were satisfied. So that’s, it’s the little things, because especially, you know, we work with a lot of real estate investors. They’re focused on the deal, you know, whether it’s a fix and flip or they’re buying and hold and, you know, they’re focused on what they should be focused on is

making sure the numbers on that deal pencil out, making sure that that ROI is there, and rightfully so. So it’s real easy to, know, like, we’re gonna start a new LLC to hold this property. And by mistake, you know, an address gets put in wrong. Now it doesn’t match and it becomes a problem. It’s stuff that we can unwind. It’s stuff that we can explain away, but it could take a week. And sometimes a deal could get lost.

if you don’t have access to funds in that week.

Michelle Kesil (20:11)
Yeah, that is so important. So tell me a bit about how you specifically help people. I know you mentioned you had a course. How does that work?

Steve Pate (20:12)
Yeah, trying to be self-reporting. So, come on in and have

So we kind of meet people where they’re at. You know, we have, you know, incredibly seasoned investors coming in that want access ⁓ not only to cheaper capital, but also to long-term capital. ⁓ So it’s kind of full service, you know, if they need higher level…

hard money lenders, they need higher level, know, DSCR guys, ⁓ attorneys, CPAs that actually understand the structure of their companies and how they’re buying and how they wanna, you know, use their write-offs on their taxes. So it’s creating a whole system that’s really, really has that, you know, symbiosis to where…

the investors are being served, we’re providing as much information as possible. So to come full circle and really answer that question for you, if you’re coming in and you’ve never leveraged business credit and you really don’t even know how your credit score even works, we got you. That educational process is there. If you’re a seasoned investor and you wanna skip half the course and go right to credit lines,

That’s totally fine. I’ll walk you through it. I’ll be like, let’s have a 10 minute conversation. You know, let’s talk about ⁓ where you’re at, where you’re going and actually know what you can skip. And I might even make recommendations. I’ll be like, Hey, skip the first three sections because you’re so seasoned. You know, obviously you have access to them. If, if you, know, if you want to go through it, if everything’s pretty quick and easy, ⁓ if you, if you don’t, here’s the highlights.

Here’s the cliff notes. Just because I want to make sure that people have an awareness. Because the worst thing I can do is make an assumption that you know how something works. And then you’re mad me in a week because you got a denial on a credit line. Or your CPA is telling us that the structure isn’t right to get the intended write-offs that we wanted to do using the debt structure that we had in place. Yeah.

Michelle Kesil (22:40)
Yeah, that’s so important.

So is this like more self-paced and then they have you for support?

Steve Pate (22:47)
Yeah, yeah. So, you know, people can go as fast or slow as they want. ⁓ The bottleneck, honestly, is building banking relationships. ⁓ A lot of that is because ⁓ post 9-11, there are agencies in place that make sure that terrorists or money launderers or, you know, all the bad guys can’t come in and open.

400 bank accounts with 400 banks in one day. where we really, the bottleneck and where we have to pace ourselves is creating banking relationships. know, about once every two weeks, if you really push it every eight days, you can create new banking relationships. But those are so important because the banks want to know who they’re dealing with. And there’s so much fraud going on these days that they need to know that you’re a known client. And that’s

actually an industry term, which means you’ve been into a branch, ⁓ a banker has seen your ID and matched it to your face. They’ve seen transactions. They know that they’ve seen your credit score. They know that you have credit cards or debit cards, you know, with that particular institution. So once you get over those fraudulent, know, making sure that you’re not a fraudulent individual and the bottleneck of being able open relationships,

things can go incredibly fast and it’s still self-paced like you said. If you want to take a year to get through it, great. ⁓ Most people are ready for ⁓ credit cards and credit line funding within 30 to 60 days.

So a lot of it comes down to how fast you want to go. When I need money, I can go incredibly fast. think most investors in real estate, ⁓ real estate entrepreneurs are the same way.

Michelle Kesil (24:34)
Thank you for sharing.

Yeah, definitely. All right, before we wrap up, if someone

wants to reach out, connect with you, or just learn more about what you’re doing, what’s the best way for them to reach you?

Steve Pate (25:01)
best way is just our domain, thewellsociety.com.

Michelle Kesil (25:07)
Perfect, okay, amazing. So yeah, I really appreciate your time, your story, and your perspective. We need more people in this space who are doing things in this right way. So thank you so much for being here.

Steve Pate (25:07)
⁓ All one word.

Absolutely. Thanks, Michelle. Appreciate your time as well.

Michelle Kesil (25:27)
And for those of you tuning in, if you got value from this, make sure you’re subscribed. We’ve got more conversations coming with operators just like Steve, who are out here building real businesses. So we’ll see you all in the next episode.