4 Ways You Can Improve Your Credit Score
If you want to run a successful real estate business, having a poor credit score can be a great hinderance. While you might not rely on your credit to fund your deals today, you never know what will happen in the future; all it takes is one or two late accounts to lower your credit score by 50 points or so. That may not sound like much, but 50 points could make all the difference in granting loan approval, and that has a direct impact on the number of deals you close. If your credit score is not exactly where you want it to be, you don’t have to give up all hope. Check out these four ways that you can improve your credit score and close more deals.
Pay on Time
The first thing you need to do when trying to improve your credit score is to obtain a copy of your credit report. In the past if you wanted a copy, you would need to go through a bank or a lender, but today you can find an online copy in a matter of minutes. You can see what accounts are listed and where you stand with them via your credit report. Timely payments account for about 35% of your credit score, and even if you think missing one payment on a card you hardly use isn’t a big deal, it can absolutely be. Develop a system that keeps you on top of all your payments. You can sign up for automatic bill pay online or write out a schedule that helps to keep you organized. If you don’t make payments on time, your credit score will take a hit every month, so be sure that you do so in order to improve your credit score.
Get (and Stay) Current
Consistently being late on your accounts will drop your score not only because of the late payment, but also because you are behind on the account. Check out your credit score and take a look to see if you have any accounts that you are 30 days late on. Every month that this account is rolled over and you only pay the current month, your scores take a hit. If you have accounts that are behind, this is where you need to be focusing. Do whatever you can to get these accounts up to date. That doesn’t mean that you should fall behind on other accounts to do this, but make these accounts a priority.
The same thing is true of any past collection accounts or charge offs. It’s far more common than you may think to find old accounts on a credit score, and these could be pulling your credit scores down. Generally there is a list at the end of credit reports that includes any collections, charge offs or judgements and if they have a balance, find a way to pay them off ASAP. Once you do, you will see a quick boost to your credit score.
Remove Delinquent Items
One of the problems with old collections and charge offs is tracking down the account holder so that you can pay them. It’s entirely possible these were put on your credit report years ago and they could be from someone who worked on your property or a credit card account that you thought you paid off. Whatever the reason and whoever the account holder is, you want to remove these items once they are paid. If you want to expedite the process, consider reaching out to a credit repair company. While these companies can’t do anything about legitimate late payments, they can help get rid of items that were reported incorrectly or have since been paid off. These companies work directly with credit reporting agencies to get updates in weeks rather than months and if there are problems with some accounts on your report, a credit repair company may be the best option for boosting your credit.
Lower Your Balances
While timely payments are the most important factor in credit scoring, low monthly balances are a close second. You can pay every single account on time, but if the amount of available balance is low, your scores won’t be as high as you think. Credit card companies like to see that you have multiple outlets to make monthly payments, and by being maxed out (or close to maxed out), your credit score will suffer.
Take a look at all of the accounts on your credit report and find those that carry balances near 80% of the maximum amount; these are the ones that are probably dragging your scores down. Work on lowering their balance every month, and the sooner that you lower this number, the better your scores will be. Even by paying just a few extra dollars every month, you can see a significant reduction in your balance. If you are committed to this for six months, you’ll see a rise in your credit score in no time.
Once you obtain a copy of your credit report, it’s time to get to work. If you feel out of your element, there are plenty of credit repair companies that you can reach out to in order to help you improve your credit score. Turning average credit into good credit won’t happen overnight, but it can be done much more quickly than you might think.