Improving your credit score
A critical part of your success as a real estate investor is your ability to obtain the financing you need to fund your real estate activities, so it's imperative that your credit score be as high as possible. Regardless of what your score is right now, it can almost always be higher. Here are three powerful ways to quickly boost your credit score and increase the likelihood that you'll always be able to get your loan applications approved, without losing your sanity:
Pay Your Bills on time - The most important thing you can do to increase your credit score is to pay your bills on-time. Your FICO score is an up-to-date snapshot of your creditworthiness, so it changes almost daily. Today's late payment may not seem like a big deal, but it can have a dramatic impact on your ability to get loan approvals when you need them.
By making it a practice to always pay your bills on-time, you are setting yourself up for continued financial success. Good credit isn't an accident that just happens. It takes work, effort, and attention to detail. Make the commitment TODAY that from now on you will ALWAYS pay your bills on or before their due-date. Nobody's perfect, but by putting on-time bill payment at the very top of your financial agenda you will steadily see your credit score increase. A few points can save - or cost - you a small fortune in late fees and missed investing opportunities.
Spice Up Your Credit Life - It's been said that variety is the spice of life, and the same is true of your credit mix. While it's great that you have a credit card or two in your wallet, it's more important that you have - and utilize - a variety of different kinds of credit.
Most of us have at least one mortgage loan, but it's also important that you utilize installment and revolving credit accounts. An example of an installment loan would be your auto loan. You have a fixed number of payments over a specific period of time in order to pay off that loan. With revolving credit, the balance can go up or down each month depending on how it is utilized. For instance, a credit card is a prime example of revolving credit. One month you might not have a balance at all; the following month could see several thousand dollars in new charges. Mix things up and make sure you use different types of credit regularly for best results.
Find the Credit Accounts You Like - and Keep Them - Some people like to play musical chairs with their credit accounts. We all know someone like this; you may even be one of them. While shopping, they see a sudden opportunity to save 10% off their purchases simply for applying for a credit account.
Unless you have every intention of opening and using a credit account, save your time and your credit score. When you open credit accounts that you don't use - only to close them a month or two later - your credit score will actually drop. So settle on the credit accounts you're going to have - and then keep them.
This doesn't mean you should never take advantage of that great zero percent financing offer you got in the mail. What it does mean, however, is that if you're going to take advantage of an offer like this, utilize it - and then keep the card for the long haul. The longer you've had a credit account, the greater the impact on your credit score. Rather than close a credit card account with a seven year track record of on-time payments in order to save a few dollars in interest charges, keep that account open. It's doing you a lot of good.
Source: Charrissa Cawley
Dy Associates is an Oakland Real Estate company specializing in commercial, home and investment property in the Oakland and East Bay Area. We provide real estate services including buyer agent, seller agent, short sales, commercial and investment acquisitions, loan facilitation, hard money lending, financing assistance property management. Articles are provided as information only. We do not provide legal or general investment advice.
