Friday, August 15, 2008

How to Repair Your Credit

The only way that you can be successful in the real estate investing realm is to have good credit. Without good credit, you will not be able to secure the mortgage loans you need to purchase property. Be prepared...this may take a few years! It all depends on your personal credit history.

Step 1 - Get to know your credit history
Get a copy of your credit report. Under a new Federal law, you have the right to receive a free copy of your credit report once every 12 months from each of the three nationwide consumer reporting companies. You can achieve this by going to http://www.annualcreditreport.com/. Another useful site is http://www.freecreditreport.com/. With this particular site, you can retrieve your credit score for free. The sooner you know your credit history, the faster you can begin the clean up process.
Note: Once you understand your credit report, scan it carefully for any errors. You have the option to dispute anything on your credit report that you think may be false information.

Step 2 - Settle delinquent accounts
Contact the lenders and set up a monthly payment plan. This may require monetary sacrifices to funnel all cash towards clearing your history. If you are not disciplined enough to start, try using one of the many debt consolidation services. Many of them provide counseling and can work with lenders/collection agencies for settlement deals.

Step 3 - Stick to the Plan!
This is where time and discipline is your best friend. Again, this may take a year or two so stay encouraged! Remind yourself that what you are doing what is best for a secure future.

Step 4 - Re-establish your credit
Although you've made great strides in repairing your credit, you are not out of the water just yet. You now have to spend time regaining the trust of lenders. One way of doing this is by using special credit cards that are available for people with bad credit. Most of these cards report directly to all credit bureaus on a monthly basis and have small credit limits for easier management. Make it a point to use your credit card a few times a month. The key to this strategy is paying the entire balance every month. So if you can only afford to put $70 a month on your credit card, $70 will be your limit. A credit score of 730 is said to be 'good' credit and will allow the best interest rates on loans. If you stay focused and keep paying your bills on time, you will be investing in real estate in no time!



Kelvin Gray
Mitten Homes, LLC
http://www.BuyHouseDetroit.com

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