Your Credit Score

As a real estate investor, it is important to keep tabs on your credit score. When you are obtaining financing for your investor loans, your score will play a significant role in your approval, and very importantly your interest rate and program you will qualify for.

Currently, the highest credit score is 800.

Ideally, as an investor you want to have a credit score above 700. We’ve found that 730 gets you the best deals.

If you don’t have great credit, that’s okay, getting your debt under control and making on time payments will help get you back on track.

Some of the things that will affect your credit score are: late payments, the amount of recent inquiries, the amount of revolving credit you have, the length of time you have had accounts outstanding in good standing.

Any late 30 day marks will have a negative affect on your ability to get a loan. Loan underwriters are looking for people who pay on time. When a loan is not performing, it affects the bank’s portfolio.

If you have had many hard inquires on your credit, meaning credit checks from companies you have actually applied for, your score goes down. This is because a red flag goes up as companies are not sure why you needed to apply so much, and they are also not sure how much new credit you may be approved for.

The actual amount of credit you have available to you may affect your credit score. Leverage is a good thing, but if you have too much of it available to you, the banks see you as a potential risk if you were to max out the entire potential credit available and run into truouble.

What banks like to see is regular, on time payments. A healthy amount of extended credit, with balances is also a good thing banks like. They are, after all in the business of making money, so they like to see a balance that you are paying interest on.

Lastly, your credit score is an average of the 3 credit bureaus. It is known as a Trimerge. The three companies are Trans Union, Experian, and Equifax. Each has it’s own score. What you need to do as an investor, and savvy consumer is know what your score is, and know what kind of activity it is getting. You’d also be surprised at the errors that you could find on your report.

In order to keep track of your score, you can order a report one time, or you can order a membership to a site that allows you to pull unlimited reports to keep track. Services also provide tips on credit improvement, and updates when your someone inquires on your credit. Experian is seen as the big daddy of the big 3 agencies. You can sign up for a membership and keep track of your score. Click here to visit the site.