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Before you start investing in real estate, improve your credit. The first thing to do is to find out your credit score. The FICO (Fair Isaac Corporation Credit) score is a way for banks and lenders to gauge your financial standing, and determine if you'd be a good person to loan money to. If you're credit score is high, then you'll get a lower interest rate. However, if your is score low, then you'll have a higher interest rate for your loan. Makes sense right. You can request a free credit report once a year.
The three credit agencies are listed below:
- Equifax (800) 685-1111
- Trans Union (877) 322-8228
- Experian (888) 397 3742
If your score is lower than 720, find out if there are any errors or derogatory marks somewhere in your credit profile. Call or write to the company that has an outstanding debt listed on your credit report that's been paid, tell them to remove it, or if it hasn't been paid off, then work something out so your not in default. You might have an old credit card that's outstanding from college, a low balance, but still hurts your credit profile. Pay this off and maybe close the account if you already have a credit card that has a long history. No need to cancel all of your credit cards, it's good to have a few cards that you've had a long period of time. After a period of time, these charges will be removed from your profile once they've been paid--roughly six months in most cases.
Overhauling your credit profile will take time. If you work towards consistency you’ll achieve a good credit profile and FICO score, which will enable you to get a lower interest rate on a loan, and perhaps give you more options as far as your down payment goes. If your credit score is good enough, you might not have to make a down payment at all.
The easiest way to establish good credit is to simply balance your checkbook, and then figure out if you have any unnecessary expenses that you can definitely live without. For instance, do you really need that big screen TV, or that expensive cashmere sweater? Most people in the world live happily without these things. Can you?
Learn more...Improving Your Credit Part II
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