Credit Score Fluctuations; Both Directions Or Only Down?
I am fairly new to the real estate investing game, but I have been fairly aggressive at it also. I've flipped 50 homes in this first year, and kept 5 for longer term. In the last three years, I've moved 7 times (graduated college, training, 1st job, started own company, now my house, etc). I had a credit score of about 730 (average) when I bought my first three-plex to hold as a rental. When I closed on the mortgage for my fifth place, my score was below 680. The reasons on my report were primarily too many credit checks (I bought all 5 houses in 7 months, so that makes sense), but also that my ratios were out of whack (balances too high compared to starting balances). I used private financing for my flips, so those don't show up or effect my score. I am considering selling my properties after one year to take advantage of capital gains (on the investments) and pull out about $300K in equity, and then putting that as a down payment on a primary that I will buy at foreclosure. I have seen several houses go through auction so far this year that are worth $1M+ that I could have picked up for $500K. I could live in it the 2 years, and sell tax free up to $250k as a single male. That would outweigh my income and tax benefits from holding my rentals by far (I've run the numbers). Here is my question; when I sell my properties and clear off my debts, will my credit score rebound quickly? I will also not have moved in over a year and there will not be anyone checking my score until then. And for any lenders out there, would you see me having any problem getting a $300k loan (refi or HELOC) on a house that I buy for $500K cash, appraises at $900k to $1.2M with a credit score as low as 670-680 if it doesn't rebound? Sounds like a no brainer, but the lenders I have used out here told me their underwriters are less confident writing the loans while I have the ratios that I do.
Also, what other tricks of the trade do you recommend for credit scores. Mine is fine, but I want it to get back to 730+. I've already pulled the reports and cleared up one glitch from several years ago. I never miss a payment.
Thanks, and this is the most valuable forum I have ever been a part of.
[addsig]
you still have good enough credit to get it done. You are also correct about why your scores dropped. Will they rebound and how fast/ No one can really tell you exactly. They will rebound as time goes by and tyour balances go down however, I don't think they'll do much in soon after you pay them off. To be honest, it'll depend on what you will be left with on your bureau. credit scoring is a patented formula that changes quite a bit so we can't know exactly if you did X, you would have Y. It's an educated guessing game by the companies that tell you they can fix your credit and by how much. Don't worry about your credit, it's fine for what you are doing. Just continue to not have any late payments and don't run up credit card debts.