Know Your Credit Score
Knowing your credit score is a very important
piece of being a successful investor and a good money manager.
Real Estate can be purchased with poor credit, however having a strong
credit score will make things much easier.
The first step to having a strong credit score
is knowing what your credit score is. How do I find out what my credit score is at
this time?
There are several sources that you can use to
determine your credit score, some free and some paid.
The following are good sources that you can utilize at this time:
FREE
https://www.annualcreditreport.com
Or you can call each of the credit agencies and
request a report:
Equifax:
800-685-1111; www.equifax.com
Experian:
888-EXPERIAN (888-397-3742); www.experian.com
TransUnion:
800-916-8800; www.transunion.com
Privacy Guard is a service that provides all
three reports and a score on a monthly basis
www.privacyguard.com
How do I know if my credit is good or bad?
Credit scores range from 300 to 850.
The following is a good break down of a good and bad score based on where
your score is:
700 and up - are considered excellent
600 - 699 - are considered good
500 - 599 - are considered risky
499 and less - are considered very risky
As an investor you want to target a 680 and
above credit score in order to obtain loans easily for your investment
purchases.
What if my score isn't where it should be
If your score is currently under 680 the
following are a few things that you can do to increase your score:
Your
payment history is a major factor as it represents 35% of your credit score. So
always, always, pay your bills on time. Late payments and
collections can have serious consequences on your credit score.
Limit
the amount of credit you apply for.
Applying for too much will decrease your credit score because this is a
characteristic of high credit risk groups.
Keep your credit in use to 25-30% of the credit
limit. Having a higher balance will
impact your credit score negatively.
It is
extremely important that you have any mistakes corrected on your credit reports
right away. A mistake may be an
item that isn't yours, an old account, an account that you don't recall
being late on or any other item that is negatively impacting you. When you dispute items the creditor has 30 days to respond,
if they don't the item is removed
.
Do not close any old accounts as you try to
clean up your credit and improve your score.
Creditors like to see loyalty, in fact 15% of the score is based on the
length of time you have had the credit.
Do not
pay off any collection accounts with out first sending the creditor a pay for
deletion letter and trying to arrange a compromise in exchange for the item
being deleted from your report.
If you currently do have credit cards that are
maxed one thing you can do is to try to get the limits raised. This will restructure your balance so that you are using less
of the available credit and will improve your credit score.
Make knowing your credit score a regular
financial activity
Make it a habit of knowing your credit score and
striving to keep it in the 680 or above range.
This will greatly improve your ability to obtain financing when it is
needed for your Real Estate investing.
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