As banks and other lenders tighten their lending requirements, real estate investors need to take another look at their own finances and what they can do to improve their overall credit situation to make achieving real estate investing success a possibility instead of a pipe dream.
If you’re like the average real estate investor, what’s holding you back probably isn’t a credit report battered and bruised by a spotty payment history. Instead, what’s preventing you from reaching your immediate goal is poor credit utilization – or simply having too much debt.
The reason for this is simple: Poor utilization. While credit card numbers one and three are under the 35% threshold, number two is at 72%.
There’s a quick and easy solution to this problem. Simply transfer part of the balance from the credit card with the $1800 balance to the card with the $200 balance. You will probably pay a balance transfer fee for the privilege, but in the long run your credit report
will be better off for it. It won’t be a major FICO score bounce, but a few points can mean the difference between an approval and a form letter.
If your problem is simply having too much debt, you’ll need to pay some of it off so you can start reaping the financial rewards available to real estate investors in control of their destiny. The number one area real estate investors (and all Americans for that matter) overextend themselves is in the area of credit card debt. If this is your situation there are a couple of different ways for you to tackle this debt.
If you don’t have home equity you can tap into to reduce your debt load and improve your credit, you’ll have to find another way. The fastest way of doing this is by adding up all of the balances on your credit cards – largest to smallest, irrespective of your interest rates. I know this flies in the face of the advice given by others who tell you to rank them according to interest rate.
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