Tag Archive for: credit score

Why Do You Need Debt?

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Although most people spend years trying to get rid of it, you actually need debt to keep your score alive.

Especially in the real estate industry, your credit score plays a huge role in the success of your investing. We see many investors (especially ones who are new to the game) struggle with some common issues:

  • Forgetting to pay bills on time
  • Overusing credit cards
  • Not using enough credit or not having any debt

Cultivating and maintaining a healthy score is a fine balance between creating debt and paying bills.

Why Do You Need Debt?

Without some debt, FICO doesn’t recognize you. Without debt, even if you try and calculate your score, you can only get a low one.

This isn’t helpful when you’re trying to purchase investment properties.

Essentially, debt allows your score to exist and gives it the chance to be high—you just shouldn’t owe anyone too much money, and you need to pay your bills on time.

Consequences of a Bad Credit Score

If you end up with no debt, your credit score is likely to drop (or disappear altogether for a while). 

With a low credit score, you can expect higher interest rates on your house, car, and any other loans you hope to take out. 

This makes you lose money fast and can get in the way of your investing or even your retirement. 

Consequences of a Good Credit Score

In contrast, if you have a high credit score, you can look forward to cheaper interest rates and lower bills. 

This makes it far easier to create successful income from real estate investing.

Additionally, if you maintain a high score, you’re more likely to build positive relationships with lenders and grow your business more quickly.

 

Read the full article here.

Watch the full video here:

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Why You Should Fix Your Credit Score for the Current Market

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If you’re stuck with a bad credit score, a 911 loan could help you fix your credit to thrive in this competitive market.

One of the most common issues of investors we talk to is low credit score.

In the real estate world, when the Fed tightens everything up (as they have done recently), credit scores become more and more important. This means that the threshold of what qualifies as a “good” credit score goes up, and it’s almost impossible to get a loan if you don’t meet that threshold.

How can you fix that quickly so it doesn’t tank your investments?

The Changing Economic Landscape

Everyone used to have options. If your credit score was a little low, it was alright; you could still find someone willing to lend to you without too much penalty.

In recent years, things have shifted.

As the Fed tightens up, there’s less money going around, meaning banks don’t have as much money to lend as they used to. 

How do they solve this problem? 

They raise the requirements for getting a loan.

Now, instead of being minorly penalized for a low credit score, some people are finding it difficult to find loans at all. And some of the loans they do find are smaller and have significantly higher rates.

Some banks may not even look at your loan application if you don’t meet their credit score requirement. Therefore, to survive in this market, you need to fix your credit score.

Understanding Your Credit Score

The 2 largest factors that make up your credit score are payments and usage.

  • Payments look at whether or not you’re paying on time. 
  • Usage looks at how much of your total possible balance you’re using each month.

For example, if your usage limit is $10,000, and you’re frequently using $7,000 of that, you have 70% usage.

Ideally, FICO wants to see you using about 20%-30% of your available credit. Any higher than that, and you become riskier for the banks.

Especially when you’re beginning as a real estate investor, it can be so easy to rack up the usage: getting supplies at Home Depot, paying contractors, etc.

It’s all-too-common to see people have $50,000 or $100,000 on maxed out credit cards.

This is where a credit 911 loan comes into play to pay down debt.

How Can I Set Myself Up to Avoid Needing a 911 Loan?

The root of this problem is almost always using personal credit cards for business-level needs. 

Getting the right business credit card in the name of your investing company has a number of benefits:

  • It won’t report to your personal credit if you pay on time.
  • They don’t penalize high usage.
  • Some business cards even reward running up a larger balance.
  • Even if your business is brand new, if you apply for a business credit card with a high personal credit score, you’ll likely be approved.

We’ve partnered with Nav to help you find a business credit card that works well with real estate investing. 

As with a personal card, you can find cards that offer perks and rewards that appeal to you. Just make sure you look for ones that 1) don’t report to your personal credit and 2) like high usage.

Our goal is to help you fix your credit score and get your business in order so that you never need a 911 loan again!

 

Read the full article here.

Watch the full video here:

by

How to Fix a Bad Credit Score

Categories:

Your credit score is powerful. A bad score can take you from making it big to losing a lot of money.

Especially in the real estate industry, your credit score plays a huge role in the success of your investing. We see many investors (especially ones who are new to the game) struggle with some common issues:

  • Forgetting to pay bills on time
  • Overusing credit cards
  • Not using enough credit

Cultivating and maintaining a healthy score is a fine balance between creating debt and paying bills.

Why Do You Need Debt?

Without some debt, FICO doesn’t recognize you. Without debt, even if you try and calculate your score, you can only get a low one.

This isn’t helpful when you’re trying to purchase investment properties.

Essentially, debt allows your score to exist and gives it the chance to be high—you just shouldn’t have too much debt, and you need to pay your bills on time.

Consequences of a Bad Credit Score

If you end up with no debt, your credit score is likely to drop (or disappear altogether for a while). 

With a low credit score, you can expect higher interest rates on your house, car, and any other loans you hope to take out. 

This makes you lose money fast and can get in the way of your investing or even your retirement. 

Consequences of a Good Credit Score

In contrast, if you have a high credit score, you can look forward to cheaper interest rates and lower bills. 

This makes it far easier to create successful income from real estate investing.

Additionally, if you maintain a high score, you’re more likely to build positive relationships with lenders and grow your business more quickly.

What Can I Do About a Bad Credit Score?

This is where companies like us or Hard Money Mike come in.

If your score has dropped because of late payments, the best way to fix that is simply time. However, if it’s low from over-usage, you have some options!

Usage Loans

So long as you are paying your bills on time and have a small amount of debt that keeps your credit score active, you can fairly easily raise your credit score with a usage loan.

We offer emergency usage loans here at The Cash Flow Company to raise your score FAST.</span>

Business Credit Cards

If you’re using personal credit cards for business-level investing, it’s time to re-evaluate. 

Real estate investing simply requires more usage than personal credit cards are designed to reward. Business cards, on the other hand, typically like higher usage.

If this is new to you, we have many resources to help you find the right business card for you.

Next Steps

We’re always happy to walk you through the ins and outs of navigating your credit score.</span>

Having a healthy score is accessible to nearly everyone with the right coaching and tools. If you’re struggling with low credit, talk to us, and we’ll be happy to discuss your options.

As always, let us know if you have questions about credit scores, usage loans, or business credit cards. You can reach out to us at Info@TheCashFlowCompany.com or fill out a contact card.

Happy investing!

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The FASTEST Way to Pay Down Debt: Credit Score 911

Categories:

If you’re stuck with a bad credit score, a 911 loan could be the perfect way to pay down debt.

One of the most common issues of investors we talk to is low credit score.

In the real estate world, when the Fed tightens everything up (as they have done recently), credit scores become more and more important. This means that the threshold of what qualifies as a “good” credit score goes up, and it’s almost impossible to get a loan if you don’t meet that threshold.

How can you fix that quickly so it doesn’t tank your investments?

The Changing Economic Landscape

Everyone used to have options. If your credit score was a little low, it was alright; you could still find someone willing to lend to you without too much penalty.

In recent years, things have shifted.

As the Fed tightens up, there’s less money going around, meaning banks don’t have as much money to lend as they used to. 

How do they solve this problem? 

They raise the requirements for getting a loan.

Now, instead of being minorly penalized for a low credit score, some people are finding it difficult to find loans at all. And some of the loans they do find are smaller and have significantly higher rates.

Some banks may not even look at your loan application if you don’t meet their credit score requirement.

Understanding Your Credit Score

The 2 largest factors that make up your credit score are payments and usage.

  • Payments look at whether or not you’re paying on time. 
  • Usage looks at how much of your total possible balance you’re using each month.

For example, if your usage limit is $10,000, and you’re frequently using $7,000 of that, you have 70% usage.

Ideally, FICO wants to see you using about 20%-30% of your available credit. Any higher than that, and you become riskier for the banks.

Especially when you’re beginning as a real estate investor, it can be so easy to rack up the usage: getting supplies at Home Depot, paying contractors, etc.

It’s all-too-common to see people have $50,000 or $100,000 on maxed out credit cards.

This is where a credit 911 loan comes into play to pay down debt.

What is a Credit Score 911 Usage Loan?

A Credit Score 911 Usage Loan is essentially a non-reporting loan that pays off all credit cards, allowing your credit score to shoot upwards.

These loans act as a fast-acting antidote to your credit score usage problems. The next time your credit report is generated, you should see significant improvement.

Essentially, it’s a quick fix for people who pay their bills on time.

Who Should Use a 911 Loan?

If your credit score is weighed down by a long history of late payments, this loan is not going to help you very effectively. 

These loans are perfect for people whose credit has been plagued by high usage, who need to fix their credit score FAST.

In short, here’s what you should know about a 911 Usage Loan:

  1. It’s used to pay down debt that’s accumulated through usage issues, not late payments.
  2. We’re an asset-based lender, so make sure you have some real estate to secure your loan.
  3. You need an exit strategy. We want to make sure you have a way of paying that loan back.

Real estate investing is a fast-moving business, and it’s important to have a quick solution for an issue that could otherwise cost you thousands of dollars in higher payments or declined deals. 

How Long Before it Pays Down my Debt?

We call this a “Credit Score 911” because we understand that a low credit score can be an emergency need.

It can take as little as 2 weeks (or up to 30 days) to get this loan and see results in your credit score. The timing depends simply on when your credit cards report and when your statements come out.

You still owe the money, but now you owe it to a non-reporting entity.

Although it can be daunting to take out an unexpected usage loan, a delay of a month is far better than a long term delay where you can’t refinance or buy.

How Can I Set Myself Up to Avoid Needing a 911 Loan?

The root of this problem is almost always using personal credit cards for business-level needs. 

Getting the right business credit card in the name of your investing company has a number of benefits:

  • It won’t report to your personal credit if you pay on time.
  • They don’t penalize high usage.
  • Some business cards even reward running up a larger balance.
  • Even if your business is brand new, if you apply for a business credit card with a high personal credit score, you’ll likely be approved.

We’ve partnered with Nav to help you find a business credit card that works well with real estate investing. 

As with a personal card, you can find cards that offer perks and rewards that appeal to you. Just make sure you look for ones that 1) don’t report to your personal credit and 2) like high usage.

Our goal is to help you fix your credit score and get your business in order so that you never need a 911 loan again!

Next Steps

If you’re wondering if a Credit Score 911 loan is right for you, what steps should you take?

  1. Look at sites like Credit Karma or TransUnion. See where your score is at, and run simulators to see what would happen if you paid off certain credit cards.
  2. Consider the qualifications for a 911 loan. Are you paying on time? Do you need to fix the problem quickly?
  3. Draft a plan to pay off a credit score loan. Especially if timing is important, having your exit strategy ready helps us get that money to you more quickly.

Remember, you still need to pay everything on time. We’re just here to help people who have fallen into the trap of using personal credit cards for business purposes in this competitive environment.

If you’re ready to take the next steps or have questions, reach out to us at Info@TheCashFlowCompany.com. 

We’re always happy to talk you through a 911 loan, how it can pay down debt, and how you can set up your business to avoid this problem in the future.

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How Does Credit Score Impact DSCR Loans?

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What do you need to know about your DSCR loans so your investing is easy, lucrative, fun, and fast?

DSCRs are investor-friendly loans. Banks calculate these loans based on the break-even point between the income of the property (rents) and the payments for that property (taxes, insurance, HOA, etc.). 

Let’s look at an example to see how credit score can impact your DSCR loans:

Once you subtract your expenses from the monthly rent, you’re left with $2,100. This means that, in order to maintain a DSCR ratio of 1 (the minimum to break even), you need a loan that has monthly payments of $2,100 or lower.

In the following example, Investor 1 has maintained a high credit score while Investor 2 has dipped below most banks’ minimum requirements.

In the two examples above, everything is the same except for the credit scores, and the effect is significant. Investor 2 can’t get a loan to refinance, and they’re either going to have to sell the property or keep their original loan for far longer than they wanted. 

Regardless, the person with the higher score is able to move through the investing process easily, lucratively, and quickly.

A bad credit score can tank your leverage and sabotage your investing by creating unnecessary roadblocks for your projects. 

In summary, leverage is king, and credit scores are an important piece of your leverage.

A good credit score makes it easier for you to qualify for and refinance your DSCRs. They can also help you put less money down on a property and increase your cash flow. 

Take care of your money buckets and credit score on the front end so you can succeed when deals come your way.

 

Read the full article here.

Watch the full video here:

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How to Win in a Bad Real Estate Market: 3 Key Tips!

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When the real estate market tightens up, you need to be prepared with leverage so you can take advantage of investing opportunities.

Once you’ve been in the business for as long as we have, you start noticing patterns. The investing world goes through cycles every few years where things tighten up before flowing normally again. 

However, a ‘bad market’ doesn’t necessarily mean bad news. 

If you’ve prepared beforehand, you can actually take advantage of the challenging landscape to build some wealth.

What is a ‘Bad Real Estate Market’?

Essentially, what’s happening right now is banks are tightening up. This means most are lending out less money, making it harder for investors to get the money they need.

This also means that, over the next 6-9 months, people are going to be getting rid of some properties and fewer people will be buying.

If this sounds like bad news, don’t worry. If you’re ready for these market changes, it can actually be the perfect time for you to buy. 

Filling Your Money Buckets

Since there’s going to be fewer loans coming out of banks, what can you do to make sure your finances are prepared for the shift in funding?

For every project, there is an amount of money that goes into it. We call it a bucket of money, or, your money bucket. 

Your money buckets needs to cover purchase, rehab, closing costs, etc. Part of that money bucket comes from lenders, and part of it comes from you. 

If you’re a newer investor, don’t panic! Read on to learn how to fill those buckets.

3 Key Strategies For Better Loans in a Bad Real Estate Market

Our goal is to help you figure out how you can get more money from lenders so less is coming out of your pocket.

1. Get Your Credit Score in Line

In the past, 660-680 used to qualify you for an okay loan. Not anymore! As lenders tighten up, most will be looking for scores closer to 750-799+. 

Lenders are depending more and more on credit scores. Make sure your credit score isn’t holding you back!

If you’re using personal credit cards for your investing projects (using them to buy supplies, pay vendors, etc.) stop now! 

Personal credit cards aren’t made for that level of usage, and most cards will drop your credit score if you’re using too much of your balance on a regular basis.

This can lead to a significant usage issue. There are two things you can do to help fix this problem:

Once you raise your credit score, make sure you maintain it. Since lenders look so closely at your score, you should too!

2. Fill Your Bucket With More Money

If you’re new to real estate investing, this is often the hardest part. However, there are many ways you can work to fill your money bucket without needing to drain your personal bank account.

Obviously your lines of credit can be an asset to your money bucket, but Other People’s Money (OPM) is also important.

Ask around your friends, neighbors, family members, or investment clubs. Many of them could be interested in investing a few thousand dollars into a project with a secured return of 8-10%.

There are so many creative ways to help fill your money bucket from hard money, to lines of credit, to OPM. With more money in your bucket, you can do more transactions.

If you need help filling your personal money bucket, reach out to us. We’ve coached many new investors through this process.

3. Be Picky With Your Deals

Don’t feel rushed. Be selective.

As you shop around for investment properties, look for ones that are under a 70% After Repair Value (ARV). 

This is a good time to be picky, especially if you’re new to the game. Choose safe deals that will guarantee you a solid return when the market heats up again.

If you do it right, finding the deals that are 70% ARV or below can open up many more deals and transactions in the future.

In five years, when everything is back to normal, those properties are going to have great value and you could create significant wealth.

We’re Here to Help You Navigate This Real Estate Market!

If you take the time to get your credit score and money buckets in order now, you set yourself up well to move quickly when you do find the right deals for you. 

If you need help figuring out where to start or you want to discuss loans or investment strategies, reach out to us at Info@TheCashFlowCompany.com or fill out a contact card.

We also have many free tools and resources that you can check out. Our goal is to help you feel equipped as you enter your investment journey, and we are always happy to help.

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Understanding Leverage, Credit Score, and Your Money Bucket

Categories:

What do you need to know about your credit score and money bucket so your investing is easy, lucrative, fun, and fast?

We want to give you the tools you need to win in the real estate game. 

In a recent article, we learned how lenders look at your credit score to determine the maximum loan they’ll offer. Today, we want to apply the same principles specifically to DSCR loans.

Some investors focus on fixing and flipping properties, while others create wealth through rentals. DSCR loans are one of the most useful tools for investors that are specifically designed for rental properties.

Understanding Leverage

Leverage is what we call using other people’s money. This typically comes in the form of bank loans, but it’s not limited to that.

Things like financial gifts, small loans from friends and family, your credit score, and loans from companies like Hard Money Mike can all give you leverage.

This leverage creates an equal playing field in the investing world. You don’t need to be wealthy to use leverage well.

Credit Score as Leverage

In this day and age, credit scores matter a lot. A good credit score is a powerful tool that you can use to increase your leverage.

We also sometimes talk about money buckets. Your ‘money bucket’ is the money you bring to the table. Obviously, if you’re a newer investor, your money bucket might not have as much personal money to fill it, in which case credit score matters even more.

However, strategically using your credit score, credit cards, business cards, HELOCs, etc. to fill your money bucket now is a great way to make sure you’re ready for future investing.

How to Fix a Bad Credit Score

If you have a low score, it’s typically because of 1) late payments, or 2) usage. Unfortunately, there are no quick fixes for late payments. However, if you struggle with usage issue, there are a few things you can do.

First of all, a usage issue typically happens when you’re using too high of a percentage of your monthly allowance. This means that, even though they paid off their balance on time every month, excessive use of a personal credit card can driving down your score.

Here’s the deal: personal credit cards are not built to handle consistent real estate investing expenses. If you’re doing consistent real estate investing, we recommend looking into business credit cards.

Business cards often have higher usage limits which are ideal for the constant wear and tear of this industry.

You can also look into secured usage loans as a way to quickly boost your credit score.

Main Money Bucket Takeaways

Leverage is king, and credit scores are an important piece of your leverage.

A good credit score makes it easier for you to qualify for and refinance your DSCRs. They can also help you put less money down on a property and increase your cash flow. 

Take care of your money buckets and credit score on the front end so you can succeed when deals come your way.

To help you get prepared, you can explore our website where we have free tools you can download to help you get organized, including a DSCR calculator and a business credit card marketplace.

If you’re interested in learning more about how you can E.L.F.F. your investing, feel free to reach out to us at Info@TheCashFlowCompany.com or fill out a contact card.

 

 

Read the full article here.

Watch the full video here:

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DSCR Loan Approval: E.L.F.F. Your Rental Properties

Categories:

What do you need to know about your DSCR loan so your investing is easy, lucrative, fun, and fast?

We want to give you the tools you need to win in the real estate game. 

In a recent article, we learned how lenders look at your credit score to determine the maximum loan they’ll offer. Today, we want to apply the same principles specifically to DSCR loans.

Some investors focus on fixing and flipping properties, while others create wealth through rentals. DSCR loans are one of the most useful tools for investors that are specifically designed for rental properties.

Understanding Leverage

Leverage is what we call using other people’s money. This typically comes in the form of bank loans, but it’s not limited to that.

Things like financial gifts, small loans from friends and family, your credit score, and loans from companies like Hard Money Mike can all give you leverage.

This leverage creates an equal playing field in the investing world. You don’t need to be wealthy to use leverage well.

Credit Score as Leverage

In this day and age, credit scores matter a lot. A good credit score is a powerful tool that you can use to increase your leverage.

We also sometimes talk about money buckets. Your ‘money bucket’ is the money you bring to the table. Obviously, if you’re a newer investor, your money bucket might not have as much personal money to fill it, in which case credit score matters even more.

However, strategically using your credit score, credit cards, business cards, HELOCs, etc. to fill your money bucket now is a great way to make sure you’re ready for future investing.

How Does Credit Score Impact a DSCR Loan?

DSCRs are investor-friendly loans. Banks calculate these loans based on the break-even point between the income of the property (rents) and the payments for that property (taxes, insurance, HOA, etc.). 

Let’s look at an example to see how credit score can impact your DSCR loans:

Once you subtract your expenses from the monthly rent, you’re left with $2,100. This means that, in order to maintain a DSCR ratio of 1 (the minimum to break even), you need a loan that has monthly payments of $2,100 or lower.

In the following example, Investor 1 has maintained a high credit score while Investor 2 has dipped below most banks’ minimum requirements.

In the two examples above, everything is the same except for the credit scores, and the effect is significant. Investor 2 can’t get a loan to refinance, and they’re either going to have to sell the property or keep their original loan for far longer than they wanted. 

Regardless, the person with the higher score is able to move through the investing process easily, lucratively, and quickly.

A bad credit score can tank your leverage and sabotage your investing by creating unnecessary roadblocks for your projects. 

How to Fix a Bad Credit Score

In the example above, Investor 2 struggled with a usage issue. This means that, even though they paid off their balance on time every month, excessive use of their personal credit card ended up driving down their score.

Here’s the deal: personal credit cards are not built to handle consistent real estate investing expenses. If you’re doing consistent real estate investing, we recommend looking into business credit cards.

Business cards often have higher usage limits which are ideal for the constant wear and tear of this industry.

You can also look into secured usage loans as a way to quickly boost your credit score.

Main DSCR Loan Takeaways

Leverage is king, and credit scores are an important piece of your leverage.

A good credit score makes it easier for you to qualify for and refinance your DSCRs. They can also help you put less money down on a property and increase your cash flow. 

Take care of your money buckets and credit score on the front end so you can succeed when deals come your way.

To help you get prepared, you can explore our website where we have free tools you can download to help you get organized, including a DSCR calculator and a business credit card marketplace.

If you’re interested in learning more about how you can E.L.F.F. your investing, feel free to reach out to us at Info@TheCashFlowCompany.com or fill out a contact card.

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The Key to ‘ELFF’ing the Real Estate Game

Categories:

Making the real estate game Easy, Lucrative, Fun, and FAST is a critical component to your success as an investor!

A while ago, Joe Polish from I Love Marketing began using the acronym “E.L.F.” to describe an easy, lucrative, and fun business.

However, in the real estate world, time is everything. While we totally support easy, lucrative, and fun real estate investing, we also recognize that we need to move FAST.

Leverage (using other people’s money in the form of loans and gifts) is what makes real estate investing lucrative and accessible. Having the right leverage when you need it can really make or break your business.

And the truth is this:

Leverage is significantly affected by your credit score.

How Does Credit Score Affect Leverage?

Having a high credit score often comes with many perks. You might get offered better rates or terms, asked fewer questions, and experience faster approvals with less paperwork.

Unfortunately, while your credit score might make the loan process easier, a bad credit score can make your life a lot more difficult.

Let’s Check Out a Scenario…

If we look at a hypothetical purchase price of $375,000. In order to make the property cashflow, all our hypothetical investors must maintain a monthly mortgage payment of $2,000.

Even though each investor is looking at the same property and mortgage payment, their credit score affects their other payments.

Our Investors:

  • Jessica: She’s a dedicated investor who takes care of her credit, monitoring her score and keeping investment payments on business cards.
  • John: He uses personal credit cards for all his investments which has resulted in a score just above the minimum eligibility requirement for most traditional loans.
  • Sammy: He doesn’t monitor his credit and is convinced the banks just hate him. He never bothers to check his credit score.

The Numbers:

Each of our imaginary investors end up in a different financial situation purely based on their credit score. 

Even though their monthly payments are the same, Jessica ends up getting much more money at a lower rate. Meanwhile John and Sammy are stuck with smaller loans, less leverage, and a slow-moving process.

The Need for Speed

In our example above, Jessica has the advantage over these two investors because she can move through projects faster. She isn’t stuck waiting for approvals or trying to come up with so much additional money outside of her primary loan. 

Leverage makes real estate investing an even playing field for everyone out there, but credit scores can limit your leverage if you’re not careful. 

A good credit score opens doors and makes everything cheaper, easier, faster. 

To E.L.F.F. the real estate business, you need to set yourself up to win.

 

Read the full article here.

Watch the full video here:

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How to Make Your Real Estate Business E.L.F.F. 

Categories:

Making your real estate business Easy, Lucrative, Fun, and FAST is a critical component to your success as an investor!

A while ago, Joe Polish from I Love Marketing began using the acronym “E.L.F.” to describe an easy, lucrative, and fun business.

However, in the real estate world, time is everything. While we totally support easy, lucrative, and fun real estate investing, we also recognize that we need to move FAST.

How Do You Set Yourself Up to Win?

You need to learn to play the leverage game. Leverage (using other people’s money in the form of loans and gifts) is what makes real estate investing lucrative and accessible. Having the right leverage when you need it can really make or break your business.

And the truth is this:

Leverage is significantly affected by your credit score.

How Does Credit Score Affect Leverage?

Having a high credit score often comes with many perks. You might get offered better rates or terms, asked fewer questions, and experience faster approvals with less paperwork.

Unfortunately, while your credit score might make the loan process easier, a bad credit score can make your life a lot more difficult.

Let’s Check Out a Scenario…

If we look at a hypothetical purchase price of $375,000. In order to make the property cashflow, all our hypothetical investors must maintain a monthly mortgage payment of $2,000.

Even though each investor is looking at the same property and mortgage payment, their credit score affects their other payments.

Our Investors:

  • Jessica: She’s a dedicated investor who takes care of her credit, monitoring her score and keeping investment payments on business cards.
  • John: He uses personal credit cards for all his investments which has resulted in a score just above the minimum eligibility requirement for most traditional loans.
  • Sammy: He doesn’t monitor his credit and is convinced the banks just hate him. He never bothers to check his credit score.

The Numbers:

Each of our imaginary investors end up in a different financial situation purely based on their credit score. 

Even though their monthly payments are the same, Jessica ends up getting much more money at a lower rate. Meanwhile John and Sammy are stuck with smaller loans, less leverage, and a slow-moving process.

The Need for Speed

In our example above, Jessica has the advantage over these two investors because she can move through projects faster. She isn’t stuck waiting for approvals or trying to come up with so much additional money outside of her primary loan. 

Leverage makes real estate investing an even playing field for everyone out there, but credit scores can limit your leverage if you’re not careful. 

A good credit score opens doors and makes everything cheaper, easier, faster. 

To E.L.F.F. the real estate business, you need to set yourself up to win.

How to Set Yourself Up For Success

We’ve been in the business for a long time and there are a few important changes you can make to easily improve your investing.

1. Switch to business credit cards.

We’ve talked previously about the importance of not using personal credit cards for business-level investing. 

Most personal credit cards simply are not designed for the level of usage needed in the real estate investing business. Because of the quantity of purchasing necessary for most fix-and-flips, you may want to look into business cards that have higher usage limits.

2. Consider a usage loan.

If you are in a situation where your credit score is negatively affected by high usage, don’t worry. You can look into a usage loan.

We offer them here at The Cash Flow Company, or you can check out our partner company Hard Money Mike. 

We’re Here to Help!

We invite you to take advantage of our 20+ years of experience and check out the programs and free tools we’ve specifically designed to help new investors like you. 

If you have questions or would like to discuss loan options, please reach out to us at Info@TheCashFlowCompany.com or fill out a contact card.

With the right knowledge and leverage, all of us can have an E.L.F.F. real estate business!

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