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Having a bad credit can be detrimental to your financing and places a number of hurdles in front of you when it comes to availing loans. Having a poor credit score can happen to anyone for a number of reasons ranging from not paying debts off to missing payments on bills. Luckily, there are ways that you can go about improving your credit score.
1. Pay on time
This is by far the most obvious way to improve your credit score, yet is still worth mentioning. It doesn't matter if you're only a few weeks late or a few months late, paying your bills late will result in a lower credit score.
2. Pay down debts
This is tricky because you want to have debts paid off almost to its entirety, but not completely. Your credit score is a reflection of how well you manage your credit, but if you pay off your debt completely you have no credit. The best way to approach this is to pay off most of your debt, but leave a little extra to manage.
3. Assortment of credit cards
Similar to paying off your debt is showing that you can manage different types of credit cards. This is not to say that you should have 10 different credit cards, but having a few different kinds will improve your credit score. Having a Visa, MasterCard, Sears and/or gas card will show that you can manage short-term and long-term credit cards.
4. No new credit
Unless it is completely necessary, it is vital that you stay away from getting any kind of new credit. Every time you get new credit an inquiry is added to your report, which drops your credit score to some degree.
5. Don't file for bankruptcy or foreclosure
Filing for either of these can kill your credit score because of the fact that they stay on your credit report for 10 years. Not only that, but they also decrease your credit score over time. The good news is the closer you get to the end of your 10 years, the less of an impact it has on your credit score.
6. Delete errors in 48 hours
This is the quickest and most efficient method to correcting any errors from your credit report and raising your credit score. There is a lot of paperwork that is required to do this, but it will save you the hassle of having to deal with much more later on.
No matter how you opt to improve your credit score, it is vital that you get a jump on it as soon as possible. Having a poor credit score can kill your financial status and will make it extremely difficult to acquire any kinds of loans down the road.
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.
These may seem like simple steps, but they can have a profound impact on your credit score ? and the size of your investing portfolio. Put this simple three step process into effect today and watch your real estate investing career grow by leaps and bounds!