It is not absolutely necessary for a real estate investor to have a good credit score in order to become successful. However, a good credit score could certainly make success much easier to attain.
Credit scores range from 350 to 850 and there are five major factors that determine your score:
1 . PAYMENT HISTORY
The largest is your payment history which includes payments that you have missed or fallen behind on, times that your debts have been sold to collection agencies, and any public records such as judgments or bankruptcies. Each of these accounts will affect your score in a different way, but combined they are worth about 35 of your total credit score.
3 . LENGTH OF CREDIT HISTORY
The third factor is the length of your credit history. The longer you have had access to credit, the higher your score. In addition to this, the longer it has been since you experienced any credit problems, the better off your score will be. If you have had open revolving accounts for 20 years, your score will be much higher than if you are just beginning your life in the credit world. The dates of last action also have an affect on this portion of your score. By paying off an old collection you may think that you are improving your score, but by paying all or part of that old debt you are only moving the last action date to the present. 15 of your score and focuses on the way you use your credit. Included in this factor are the number of open accounts you have, the risk that is associated with each account, and the ratio between revolving accounts (i.e. credit cards) and installment accounts (i.e. bank loans).
5. CREDIT INQUIRIES
Finally, your use of new credit affects approximately 10 of available credit
[ ] If you don’t have an auto loan take out a small one and pay it in advance each month
[ ] When getting an auto loan never allow your loan to be shopped--get your loan from a bank
[ ] Pay house payments or rent by check
[ ] Be sure the house payment or rent check is dated on or before the due date
[ ] Do not cancel any credit card accounts
[ ] Have a relative or friend put your name on their older on time loans or cards
[ ] Avoid having your credit pulled (you can pull it yourself without loosing points)
[ ] Do not make payments on very old accounts (You’re just starting the clock over)
[ ] Read and study credit repair notes above
[ ] After several months cancel credit repair service and start the next phase
[ ] Next order all 3 reports and scores from Identity Guard
[ ] Print out your merged credit report with scores and highlight the remaining negative items
[ ] Use the suggestions at the top of this report and continue the repair campaign
[ ] Call to negotiate a settlement for any old repo’s or collections
[ ] In your negotiations NEVER admit the debt is yours—just that it is on your report
[ ] Complete and check off each item on this list in order for best results
By doing these simple things you will save yourself many many thousands of dollars on all your future loans. And--if you really want to jump start your score order "7 Steps to a 720 Credit Score" and study the techniques in that program.
In review
? Have errors removed from your credit reports ? Have three or more revolving credit lines ? Have an active installment loan ? Keep credit card balances under 30% ? Verify & correct accuracy of reported credit limits ? Get a letter of deletion before paying off collections ? Set up a structured plan to correct credit ? Order "Seven Steps to a 720 Credit Score"
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