Poor credit greatly restricts how you run your real estate business. While you might not lean on credit to fund deals today you never know what the future holds. All it takes is one or two late accounts to knock your credit score down fifty points or so. This may not seem like much but could make all the difference in granting loan approval which has a direct impact on the number of deals you close. If your credit is not where you would like it to be hope is not lost. There are ways you can quickly turn things around. Here are five ways you can improve your credit score and get your business back on track.
- Timely Payments. The first order of business when trying to improve your credit is obtaining a copy of your credit report. In the past if you wanted a copy you had to go through a bank or lender. Today you can find a copy online in a matter of just a few minutes. With your credit report you can see what accounts are listed and where you stand with them. As you go about fixing your credit it is important that you don’t make things worse. Timely payments account for about 35% of your credit score. A missed payment on a card you rarely use is still a big deal. You need to develop a system to stay on top of all your payments. This can mean automatic bill pay online or devising a schedule to help keep you organized. Without timely payments your credit score will take a hit every month. As you look to move forward you need to make sure you pay your bills on time every month.
- Get Current. If you consistently late on your accounts your scores will drop. Not only is this because of the late payment but also because you are behind on the account. Take a look and see if you have any accounts that you may be 30 days late on. Every month that you roll this account over and only pay the current month your scores are taking a hit. These accounts should be where you focus first. It is important that you do whatever you can to get these accounts up to date. By doing so you will see a quick boost to your credit score. This doesn’t mean you should fall behind on other accounts to do so but you need to make these a priority. The same is the case if you have any past collection accounts or charge offs. Finding old accounts on your credit report is more common than you think. An old credit card from years ago could turn into a collection account that is pulling your credit scores down. At the end of most credit reports there will be a list of any collections, charge offs or judgements. If they have a balance you need to find a way to pay them off as soon as you can.
- Remove Delinquent Items. One of the problems with old collections and charge offs is tracking down the account holder to pay them. It is possible that these were put on your credit report years ago. They could be from someone who worked on your property or a credit card account you thought you paid off. Whatever the reason and whoever the account holder you want these items removed once they are paid. To expedite this process you can reach out to a credit repair company. If you are a night owl you have probably seen commercials from these companies promising to improve your credit. While they cannot do anything about legitimate late payments they can help get rid of items that were reported incorrectly or are since paid off. They work directly with the credit reporting agencies to get updates in weeks instead of months. If there are problems with some accounts on your report a credit repair company can be the best option to give your credit a boost.
- Lower Balance. If timely payments are the most important factor in credit scoring low monthly balances are a close second. You can pay every 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. By being maxed out, or near maxed out, on your accounts your scores will suffer. Take a look at all of the accounts on your credit report and see which ones 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. The sooner that you lower this number the better your scores will be. By paying even just a few extra dollars every month you will see a significant reduction in your balance. If you are committed to this for six months you will see a rise in your credit score in no time.
Once you obtain a copy of your credit report you should get to work. If you feel that you still need help there are plenty of credit repair companies you can reach out to. Turning average credit to good won’t happen overnight but will often happen much quicker than you think. You never know when you will need strong credit to help in some area of your business.
