Real estate and financing go hand in hand. Therefore, building your credit is important in real estate investing. Here are some tips on building your personal credit.
There are three credit repositories: Equifax, Experian, and Transunion. Check your credit report every six months for any discrepancies or sign up for credit monitoring services.
The credit score are calculated based on the following percentages:
- 35% Payment history
- 30% Debt to available credit ratio
- 15% Length of credit history
- 10% new credit
- 10% types of credit used
Pay your credit card bills on time. Be aware that some credit card companies change the due date without notice. You can also call your credit card companies and change the due dates of all your cards to fall within several days so you don’t forget.
Other than payment history, we have the most control over the debt to available credit ratio. Call your credit card companies to increase your credit limits and decrease interest rates every six months. Also, apply for new cards every quarter to increase available credit and hence increase credit score. Do not use more than 30% of your credit limit on any one card or it will bring down your score. Get rid of your department store cards which are considered “bad” credit cards.
Feel free to contact me to get a free investment property analysis worksheet and the script for requesting credit increase with your credit card companies.