If you invest in real estate, chances are you’ll need to secure a loan at some point in your venture. Lenders will build your loan based almost entirely on your credit risk and financing real property can be costly with a less than desirable credit score. The lower your credit rating, the more your financing will cost you. Lenders charge higher rates and additional fees to compensate for the extra risk they assume. Unfortunately, these extra charges eat into your profit margin which negates your purpose for investing in the first place.
Getting started in the real estate industry can be especially difficult for people with a lower score. While nobody has perfect credit, establishing and increasing your score takes time. To further complicate matters, the most profitable real estate deals get scooped up quickly by other investors. Time is perhaps the hottest commodity in the real estate industry, second only to a great credit score. So, what are your options?
Knowledge is Power
Knowledge is power! We’ve all heard it said and it’s true. You don’t have to miss out on profitable real estate transactions while you’re getting your credit report in order. You just need to know where to focus your efforts. Not all credit scores are created equally. Lenders look at your FICO (Fair Isaac Corporation) score to determine the parameters of your financing.
Your FICO score is a three-digit number reflecting your creditworthiness. It uses a complex algorithm based on information in your credit file to generate the score lenders see when you apply for a loan. It gives lenders a speedy standardized way to determine risk. A higher FICO score typically gets you a better interest rate and a higher LTV (Loan to Value) which means less money out of pocket.
Use a Credit Score Simulator
While there is no quick fix for your FICO score, there are some important steps you can take for a more immediate impact. You’ve likely heard advertisements for free websites that allow you to monitor your credit profile. While these sites can be beneficial, they don’t provide the same scores lenders use. You cannot get your FICO score from these websites, but you can get it at Loanbidz.com. Clients who choose to work with us have access to our free credit simulator tool that comes straight from the credit bureaus.
The professional team at Loanbidz.com connects real estate investors like you to top-rated lenders across the nation. You can use the credit simulator tool to see how your score will change when you reduce outstanding balances on your credit report. This gives you the power to analyze all the options for your next real estate transaction. Working with the team at Loanbidz.com helps ensure you get your best loan every time. Contact us today to see how we can help you formulate a strategy to reach your real estate investing goals.