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Improve Your Credit Score

So how do I improve my credit score? Often people will go to Google and search for, "improve your credit score instantly". Instead, you're better off trying to "improve your credit score in six months". Just like there's really no fast way to make a lot of money, there's no quick and easy way to improve your credit score. It takes time. It takes work. It takes discipline. You have to build up and establish good credit, showing you pay your bills on time consistently.

If you don't have a good credit score, it really doesn't make sense to start investing in real estate through an investment property. You should first try to improve your credit score before researching whether or not you should invest in a rental property.

Without a good credit score it's hard to get a low interest rate on a loan, so it makes the numbers harder to work in terms of buying and making money with an investment property. You'll end up paying too much in interest with a low credit score or might not even be able to get a good loan unless you put a substantial amount of money down on the property you're looking to purchase.



So, before you start investing in real estate, improve your credit score. 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

Here is what Experian.com says about simple ways you can improve your credit - follow through with these steps for six months and you'll be well on your way to a better credit score:

Take These Steps to Improve Your Credit Score

  • Pay your bills on time. Delinquent payments and collections can have a major negative impact on a credit score.
  • Keep balances low on credit cards and other "revolving credit."
  • Apply for and open new credit accounts only as needed.
  • Pay off debt rather than moving it around.

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?

If you really want to make money through an investment property then you'll first get your own house in order and establish good credit so you have a high credit score - basically, all this means is paying your bills on time and consistently. It's really not that hard.

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