Letters To Stephen – Are You A Drug Dealer?

In and amongst the many emails that solicit Viagra or ask in my assistance to help a deposed Prince from Abu Dhabi get his money out of a foreign account, I sometimes get questions worth answering. Although a lot of them, I just fire back an answer on the spot, sometimes I decide to answer them here on my little piece of the InterWeb. This time, our question comes from Henry, a concerned netizen on the topic of credit worthiness for online money makers…

Henry Writes…

Dear Stephen 

Does working online affect your credit? Yes I am not sure about this but does working online change your credit details because technically it is not a real job. It is just like drug dealing ( just an example!) its a private business , but I am not sure well anyways does it affect your credit?

Sincerely,

Henry

Well, Henry, making money from the Internet is definitely not drug dealing. Despite the fact that I have a hard time explaining to people what I do for a living, I certainly can while I doubt that drug dealers go around telling people that they are drug dealers. Let’s use a better example…

Say that you and a friend both own yard work businesses.  Both of you are enjoying record profits and of course, you like to buy things with your money. Last year, you declared a profit of $60,000 and paid taxes on it. Your buddy, we’ll call him Jim, declared $40,000. 

You like to buy things, but you have a hard time paying your bills on time. Jim also likes to buy a lot of things too, but he always pays his bills on time. One day, you both have decided to buy houses next to eachother. You both go to the same mortgage broker, but you are turned down due to your excessive late payments in the past. Jim is able to secure a mortgage the same day at a great rate due to his excellent payment history. So why did you get snubbed, even though you make more money than Jim?

Well, the bank loans on a number of factors, but most importantly, they look at your ability to pay off the loan or your credit worthiness. Despite the fact that you make more money, you are a scatterbrain when it comes to keeping your accounts up to date. As a result, you have a consistently lower credit score than Jim. So the lesson here is that your credit worthiness not only has a bearing on how much you make, but it is also heavily weighted on how well you manage to keep those credit accounts up to date. Think of it logically: If I borrow money from you and never pay at agreed intervals or amounts, would you lend money to me even though I make a lot of it?

So what does this have to do with your credit worthiness whether you make money online or do yard work? Again, your credit worthiness is dictated by your payment history and to an extent, your notice of assessment which is how much you declared for taxation purposes. Basically its an official statement of what you make each year. There should be something similar in the US and other countries.

My business is a corporation and I pay myself a salary. At the end of the year, my corporation files a tax return and I file a personal return. I filed a personal return when I had a job and I filed a personal return when I made money online. I keep my accounts up to date and pay my bills on time. So does making money online have any bearing on credit worthiness, all else being the same? The answer is no.

So go ahead and make money online, but just make sure that the government gets their fare share, and always pay your bills on time.