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- INTRO PART 4 – Getting From Where You Are To Where You Want to Be
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- Why Do Hassle-Free Cashflow Investors Love Texas Real Estate
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Secrets to a Higher Credit Score
and More Importantly How to Profit from It
By Professional Investor – David Campbell
Having a good credit score is an asset only if you plan to use it to make money. I know people who consider their 750 FICO as a badge of honor. A credit score is a financial tool, NOT a measure of self-worth. If you aren’t utilizing your credit score to generate passive income, does it matter whether your FICO is 570 or 750? It’s like having a luxury car that is too precious to drive. If your credit score is sitting idle in your garage, it’s time to put it in gear and make money with it!
Here are a few secrets to a higher credit score:
1. A credit score above 680 gives you the ability to borrow money for investing.
2. A higher credit score generally means you will be able to borrow cheaper money.
3. Banks borrow money at a low interest rate (banks can borrow money for 1% or less).
4. Banks invest the money at a higher interest rates (mortgage rates are around 5%).
5. Banks earn 5% on money borrowed at 1% which results in a 4% profit on other people’s money! It is good to be the bank.
6. Your good credit score allows you to be your own bank! You can earn 9% on money borrowed at 5% which results in a 4% profit on other people’s money. If your credit score allows you to be the bank, what are you waiting for?
I can show you how to turn your good credit and a good job into $800,000 of loans at 5% secured by $1,000,000 of real estate WITH NO MONEY DOWN! If you could borrow $800,000 at 5% ($40,000 year cost) and invest it at 9% ($72,000 income), you would have a 4% profit on $800,000 ($32,000). If you can make an additional $32,000 from investing your credit score and no cash, why would you let your credit score sit idly in the garage?
If you don’t have a good credit score here are a few tips on how to get one.
1. MAKE TIMELY PAYMENTS: This seems obvious, but we sometimes forget. Consider setting up your bills on automatic bill pay with an arrival date well before your due date. Credit companies typically will let you know when you are a few days late, but they don’t ding your credit until you are 30 days late. If you get a “late pay” phone call, take it seriously and act right away because your time is running out.
2. LOWER YOUR RATIOS: Keep your credit utilization to about 25 to 35 percent of your available credit The credit bureaus don’t like to see “maxed out” credit. You can lower the percentage of your drawn credit to credit limit by either paying down your debt and/or increasing your maximum allowable credit limit. In other words, if you have a credit card that is close to its maximum balance, call the credit card company and ask them to increase the credit limit. Tell them you would like them to do this without pulling your credit. In addition to this, spread out your balances among your cards trying to keep the ratio between card balances and credit limit to 30% or less. For example, let’s say you have 3 credit cards and $3,000 in credit card debt. If all the cards have limits of say $4,000, it would be best to put $1,000 on each of the cards than to have just 1 of those cards with the full $3,000 balance.
3. MINIMIZE CREDIT INQUIRIES: Applying for credit makes your credit score go down. Applying for new credit is like taking one step backward to go two steps forward. Once you attain the credit that you applied for, and you make regular on-time payments, your credit score will go up. If you are shopping for a major purchase such as a car or mortgage, many credit inquiries within a very tight time span are usually only counted as one credit inquiry. If you are applying for a mortgage, you can get many of your questions answered without having your credit pulled, but to get a definitive credit decision a mortgage broker will always have to pull your credit to understand your debt to income ratio as well as your actual credit number. Giving your mortgage broker a copy of your credit report can reduce the number of credit inquiries when pre-qualifying for a loan, but a mortgage broker will always pull your credit report once when they submit your loan and sometimes a second time before the loan funds. If you are waiting for a loan to close, don’t apply for new credit anywhere else until your loan funds.
4. AGE YOUR CREDIT: Never cancel a credit card that is more than 2 years old. Having a “seasoned” account is a big plus for you. If you have children, get them a credit card as early as possible and teach them to use it responsibly. Length of responsible payment history is a major consideration in the strength and durability of your credit. Sometimes you can create additional credit history by adding yourself to the account of a family member who has a long and successful credit history. CAVEAT: This can become a liability if the payment history of your family member is poor or becomes poor in the future.
5. LOOK FOR ERRORS: Studies show that 79% of all credit reports have errors on them. If you have errors on your credit report you can try to fix them yourself through the credit bureau website or seek the help of a credit repair specialist. If you are looking for a recommendation, I know an excellent source I would be happy to refer you to.
You see, our relationship isn’t just about helping you find an amazing investment property; that’s a very small part of what we do. I want to make sure you have access to the financial education you need to make smart decisions and a world class team to support you in the execution of your investing plan.
Thanks again for letting me enter your world each week and thanks for the referrals of your friends and family members. I appreciate it and so do they.
If you would like to monetize your good credit, don’t wait, give me a call soon to talk about your options.
To your success,
(866) 931-9149 Ext. 1
Keyword: Higher Credit Score