Knowing Your Credit Score Is Critical When Real Estate Investing

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Your credit score is yet another topic that will greatly impact the quality of our life for its entirety yet it is something we are never taught in school. (This seems to be an all too common trend)

Do you know your credit score?

If so I applaud you as most of us don’t and probably never will until it is too late. When I refer to ‘your credit score’ I mean the FICO score that makes up a large portion of a credit report so lenders can decide how much risk you pose and if they should lend you money.

To give you an idea of how this number is generated the credit bureaus (Equifax and TransUnion are the most common) take into account these 5 things:

- payment history

- types of credit

- length of credit history

- new credit

- current amount in debt

They use a formula that creates a number and this number is tied to you for life. It can fluctuate and the higher the number the better your credit score.

Which class in school covered this? Or better yet how often have you heard people speak of this? We are trained not to.

Yes, it can be a private matter but in our society it is kept so private that most people have no idea what their score is and the importance of it.

As an investor and business owner, you should know what your credit score is as it can drastically change your options when investing. Many of the most aggressive mortgage programs may only be available to people with great credit.

So knowing and monitoring your credit can change the way you conduct business and affect your profit and expense numbers as well. It can be the difference between reaching your goals this year or taking two or more to get where you want to be.

If your credit score is low you may not qualify for financing at all or have to pay a much higher interest rate with all sorts of lender fees.

If your credit score is damaged by missed payments, bankruptcies, etc.. It can be fixed. Life happens and sometimes it can take its toll but it is important to find out what needs to be done to fix your credit and get it back up.

Sometimes simply paying off one credit card completely even if it is only a small amount outstanding will immediately have a positive impact on your score. Make sure you realize things can be fixed and if you end up with a bad score take the necessary steps to correct it.

It may take time but if you don’t start now when will you?

Personally I always want mine to be above 700. My understanding is that if it is above 680 in Canada you have a much easier time getting approved for many types of financing.

I like to keep it higher just in case there is a hiccup it should not effect what I can do in my investing business.

OK, enough about the score I think you get the idea. How do you find and monitor yours you ask?

You can pull your credit score for free and have it mailed to you, or view it online for a small fee and get it instantly. Some people think any inquiry as to your credit will effect your score, it won’t.

When you pull your own credit it is called a ‘soft pull’ and does not have any adverse impact. You can find out yours at www.transunion.ca or www.equifax.ca

It can almost be scary when you see the records that are kept of you. But it is also empowering when you know what people will be looking at when you building your real estate business.

To help your business thrive know your score and if needed do what it takes to get it up to where you want it. It will impact your options and profit moving forward and help you talk to your prospects with a new found level of knowledge and confidence.



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