Credit Repair Tips for Real Estate Investors

Buying an investment property or buying into an investment group does not cost as much as starting other types of businesses from scratch. One thing that every investment requires is cash if you have it or financing options. If you already hold a mortgage, the idea of refinancing it or taking out a second mortgage to pay for an investment property can be frightening. Your personal credit is always considered and holding two mortgages might be too close for comfort for people with multiple sources of unsecured debt. Obtaining financing depends heavily on your credit score and there are credit repair tips for real estate investors that can help boost your score to a higher level. 


Credit Repair Tips for Real Estate Investors

1. Obtain Credit Reports from 3 Credit Bureaus

Banks can use more than one credit bureau to make lending decisions based on personal credit scores. The largest bureaus in the U.S. are Experian, Equifax and TransUnion. Each of these bureaus might have conflicting information that could lower your score when it is compared by lenders. Seemingly simple errors like work history, birth date and paid but not removed debts can be harmful. Most lenders do not disclose what credit bureaus are used to obtain your credit score until after a lending decision is made. Fixing up any issues in your personal report and comparing all of the data could help boost your credit score enough to get a first or second mortgage for an investment property

2. Pay Down Debts or Settlements

Automobile loans, credit cards, and department store cards are all included in your credit score. The average consumer has one or more of these debts that are paid on each month. Repairing your credit and wiping away this debt will immediately make a change to your credit score. Many times loans are not granted because the debt to available credit ratio is too high. Paying down these debts boosts your available credit and banks and lenders use this data to finalize decisions. If you own a business, your personal credit can be affected by debts that your company owes. Removing these debts or paying them down to 50 percent or a smaller amount is a great repair tip before applying for financing in real estate. 

3. Dispute Incorrect Information

Personal information can change from the time that you apply for a credit, loan or charge account. Not every company stays current with your changing information and mistakes can be printed on your credit report. By law you can dispute anything that you question on your report. Credit bureaus must investigate your claims and respond to you within 45 days of your notice. As you pay down debts, this information might not be updated quickly and cause your score to remain the same. There are many reasons that you would want to dispute the information in your credit report. Keeping a watchful eye on it can help you obtain the financing you need to buy your first or second investment property.

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