Tag Archive for: credit score

3 Ways to Use Credit Cards in Real Estate Deals

Categories:

How can credit cards help real estate investments? Here are 3 ways to use 0% cards.

Business credit cards with 0% rates can be a great entry point for new investors. Unsecured credit can fill the gaps left by your primary loan.

But how is a credit card supposed to help on a real estate investment? Let’s go through 3 ways you can use it.

1. Reserves or Down Payment on Credit Cards for Real Estate

If you have unsecured lines, or even 0% credit cards, and move the money over to accounts, then you could use those funds as reserves or a down payment.

The more money you can put in as a down payment, the better your rate, terms, and cash flow will be. Maybe funds from a credit card could allow you to put 10% rather than 5% down. This change could lower your interest rate by 1-2%.

Lenders give better rates to lower loan-to-value deals – especially for bridge loans. Take advantage of this by using unsecured credit to get more money.

2. Saving Money on Interest

Typical interest rates on credit cards are around 19-29%.

Say you put $25,000 on a 24% credit card for an investment project. Over the course of a year, that’s about $6,000 in interest. Multiply that by however many projects you complete in a year, and the costs add up fast.

0% business credit cards just make sense. With these, you can pay $0 in interest for your first year or two, rather than an astronomically high 29%.

3. Protecting Your Credit Score

When you use credit cards on your personal account, the usage negatively affects your credit score. You can’t get great loans from banks and private lenders with a bad credit score.

These 0% credit cards and other unsecured lines should be put under your business name, not your personal name. When you use an LLC, this credit usage comes off your personal credit report.

Read the full article here.

Watch the video here:

https://youtu.be/REkxzKoe6kw

by

How to Get a Business Credit Card (And Get Better Loans)

Categories:

Using a business credit card changes your RE career. Here’s how to get one.

Real estate investors should think of their investment projects as a business. And a huge step in propelling your business forward is to get a business credit card.

A card for your business can solve some major credit-related problems. Here’s what you need to get one.

What You Need to Get a Business Credit Card

There are three main things you need before you can get a good credit card with an easy process. You need good credit, a business, and a generic business name:

  • Good personal credit. The higher your score, the better your options are for card terms.
  • A business. (A sole proprietorship counts). The longer you’ve been in business, the better. But bare minimum, it will need to be a couple months old and have a bank account.
  • A generic name. Additionally, the process will be smoother if the business’s name doesn’t sound like a real estate or lending company.

How to Get One

Do you have the credit, the business, and the right name? If so, then getting a business credit card for real estate is easy.

Go to a site like bankrate.com or Credit Karma to pick the card that’s best for you. You can also visit Nav’s list of business cards to compare different types. Fund & Grow also has some great options you could look into.

If you keep balances, then you may want to look at cards with 0% intro rates. You can change them out every year and save a lot of money.

Once you stop putting your projects’ expenses on your personal card, your credit will be more free for investment opportunities.

Need Help Setting Up a Business Card?

Not sure how to set up a business? Don’t have the right credit to open a card? Reach out to us – we have solutions to fix this quickly.

And lastly, you can also check out Fund & Grow. Ask us about the discounts they gave us to pass on to you!

by

Solve Your Credit Problems: Business Credit Cards for Real Estate Investors

Categories:

Here’s how business credit cards for real estate investors impact your credit.

You rack up business expenses on your personal credit card for your real estate investing business, and now… Your credit score is too low to get more loans to keep your real estate investing business going.

What’s the answer to this dilemma? Business credit cards for real estate investors.

Personal Credit vs Business Loans

A lower credit score makes it harder to obtain the loans you need in your personal life, such as:

  • Car loans
  • Home loans
  • Student loans
  • Credit cards
  • Boat loans

But your personal credit doesn’t only impact your personal loans. It also impacts the loans you get for your real estate business – which are based on your personal credit score. Whether or not you can get a loan, or how good the terms of the loan is, depend on your credit score.

You need credit cards to keep your real estate projects and business going. What you don’t need, however, is that credit usage driving down your personal score and costing you tens of thousands to hundreds of thousands of extra interest over the years.

What Do Business Credit Cards Do For the Real Estate Investor?

Business credit cards can help solve this problem of usage.

Business credit cards for real estate investors remove your balances from your personal credit, fixing the problem created by the need to use the cards for your projects.

These cards don’t show up on your personal credit, so they don’t drive down your score or get counted against your debt ratios for new loans.

Your business expenses become business debt when put on a business card.

Getting a Business Credit Card as an Investor

Using a business credit card as an investor gives you the benefit of using a card, making accounting easier and not negatively impacting your personal score.

If your investing career is a business, you should be working to obtain a business credit card. Reach out to us to ask how to get started.

And for more credit score tips, check out these videos.

by

How to Raise Your Credit Score Fast: Usage Loan

Categories:

What’s a usage loan? And how does it raise your credit score?

Your credit card usage is reported to the three credit bureaus.

This impacts your FICO score.

Your FICO score impacts the funding and terms you can get for your real estate investments.

So what is a usage loan? Where does it come into all this?

Why Usage Matters

If you pay off your card balances before the next reporting cycle (before your next statement), then your FICO score will rise.

Disclaimer: your score will go up as long as everything else stays the same. As long as you have not taken out other credit, missed a payment, or created over negative credit issues, lowering your usage will have a 

But if you had the cash laying around to pay off these balances, you probably would have done it awhile ago. How do you bring your usage down without cash? That’s where a usage loan comes in.

What Is a Usage Loan?

It’s a loan that makes life easier and more profitable for you.

A loan to correct the usage that negatively impacts your credit score and limits your access to GOOD leverage.

More specifically, it’s a private loan that does not report to your credit bureau that you can use to pay down your credit cards, thus increasing your credit score.

It tips the lending guidelines back in your favor AND gets you better, cheaper, and easier loans.

How to Get a Usage Loan

A usage loan isn’t meant to deceive your lender. You still have to let lenders know you have this debt.

If your debt was on a business card where they belong, it wouldn’t count against your personal credit. What a usage loan does is give your credit score a leg-up to get you the best funding you deserve. 

Interested in discussing a usage loan? Let us know here.

For more info on getting credit ready for leverage, you can watch these videos.

by

4 Ways Bad Credit Impacts Loans for Real Estate Investors

Categories:

Ease of funding makes real estate investing easy or hard. Here are 4 ways bad credit impacts loans.

In our 20+ year history in the lending world, we continually see credit usage as the #1 thing keeping real estate investors from obtaining the best funding possible.

Credit is the main reason funding is granted or denied. To win this game, you need to understand this and work to put yourself in the best position to succeed.

Let’s go over 4 ways that bad credit impacts loans and what you need to succeed.

The 4 Ways Bad Credit Impacts Loans

The 4 most negative potential impacts due to low credit scores for real estate investors are:

  1. Being denied a loan (so you can’t purchase or refinance a property)
  2. Cash flow takes a hit with higher rates, around 1-4%
  3. Higher closing costs, around .5 to 2%
  4. Being required to put more money down on a property (lower LTV on loans)

Let’s dive in to what each of these means for an investor.

1. Bank Turn Down

If lenders won’t lend to you, then it’s almost impossible to invest and make money. No loan, no property – no property, no investing.

Sometimes this means no one will lend to you with bad credit. Other times, you can squeeze in, but pay more than your competitor.

2. Paying Higher Interest Rates

Paying higher rates brings a lot of setbacks.

With a bad credit score, you might need to go to a different type of lender who will charge more. If not that, then you’ll at least be dropped to a lower lending tier (ie, higher interest rate) with the cheaper lender.

In any case, you’ll feel the hit of higher rates in your cash flow.

To show this, here’s an example of a 2.5% difference in rate on a $300,000 mortgage:

  • Rate of 6.25% = monthly payment of $1,847.15
  • Rate of 8.75% = monthly payment of $2,360.10

An investor with a 680 score might get the 8.75% rate. Another investor with a 780 could get closer to 6.25%. That’s over $500 more per month one investor pays versus the other.

More money means more you can re-invest. Another example of why it is easier to succeed with better funding.

3. Paying Higher Fees

Almost every lender has pricing tiers. These tiers are usually tied to credit scores in some way.

The lower the score, the higher the cost of the loan. With bad credit, some lenders jack up the rate and others jack up the fees.

These fees typically come in tiers similar to this one from a bridge lender:

In this example, on a $300,000 loan, you will pay an extra $1,500 to $3,000 more than your competitor with great credit for the same loan.

4. Lower LTV Funding

Credit score is the main reason some investors can get away with only putting 10% (or even 0%) into a project while others have to bring in up to 25%.

In our $300,000 property example:

  • At 10% down, you bring in $30,000
  • At 25% down, you bring in $75,000

That extra $45,000 could keep you out of deals and or limit the number of deals you could have going at a time.

Keep Bad Credit from Impacting Loans

Overall, we need funding to succeed in real estate. The cheaper, easier, and faster it is, the more opportunities and success it creates. Bad credit impacts the loans you can get for your investments.

Check out these other tips to quickly raise your credit score on our YouTube channel.

You can also send us an email anytime with questions about your credit and real estate investing loans at Info@TheCashFlowCompany.com.

by

How to Use a 0% Business Credit Card in Real Estate Investing

Categories:

Loans won’t cover your real estate project and you don’t have cash? Here’s how to use a 0% business credit card.

At The Cash Flow Company, we’ve used business credit cards for our investments for over 12 years.

The people here have used them, we’ve helped other people use them, and we understand first-hand that this is a great tool for investors.

Why are they so great?

Why We Recommend 0% Business Credit Cards for Real Estate

Typically, the more money you have to put into a transaction, the better the terms you’re going to get on a loan. When you show that you have other lines of credit (or cash) available, lenders can open up doors that are otherwise closed for you.

When it comes to lines of credit – why pay 20%+ interest rates when there are 0-3% card options available to you?

The Right Way to Use a 0% Business Credit Card

In real estate investing, you always need money. You have a money bucket that constantly needs refilled. This is just one way to fill it.

Using unsecured lines of credit is perfect for the right investor – someone who can treat the credit like a business.

You have to stay on top of unsecured credit. If you put expenses on your cards, then you have to pay it off when the property sells. 

Using a 0% business credit card to fund your personal life leads to nothing but trouble. Misusing unsecured credit in this way is what gives it a bad name.

Investors who use this method get new credit cards every year with new 0% offers. Many investors use them as a stepping stone for the first year or two of their career. Leaning on credit cards early on eventually gets you the funds to move onto more secured or dependable financing sources later.

How Do You Get 0% Credit Cards?

Curious about how to use 0% credit cards for your real estate investing business? Here are some options with the folks at Fund & Grow that could be right for you.

If you want to put business credit in your name and get up to $250,000, we have a service just for you. Reach out at Info@TheCashFlowCompany.com for more information.

Read the full article here.

Watch the video here:

by

Is Credit Usage Wrecking Your Real Estate Leverage?

Categories:

Make real estate leverage easy or hard… Your score, your choice.

Leverage is the secret to successful real estate investing. What they say is true: it takes money to make money.

The cheaper, easier, and faster your real estate leverage, the more you’ll enjoy investing.

The number one factor in how cheap, easy, and fast real estate leverage is? Your credit score. Let’s go over how that works.

How Credit Score Impacts Real Estate Leverage

A good credit score will help you find an affordable loan – even if your experience or income is limited. The better the score, the more doors will open for you.

Barriers fall away as your credit score rises. The loan you get with a 780 score is much simpler and cheaper than the one you’d get with a 640 score.

  • Cheaper money means you’ll make bigger profits with your deals.
  • Easier money means less paperwork and hoops to jump through.
  • Faster money allows you to take advantage of good deals when they pop up.

To succeed in real estate investing, you want all three working for your leverage.

Credit Usage vs Real Estate Leverage

Good investors pay their bills on time every month, keep a mix of credit, and practice other good habits that make up their credit score.

One of the most common obstacles that keeps good investors from the best money sources, however, is credit usage.

Credit usage is a percentage that says how much of your credit limit you’re using. Many investors use their personal credit cards to cover the costs of their investment properties. But this usage lowers personal credit scores and raises the cost of doing business.

Poor credit usage is a hidden enemy sabotaging many investors’ careers.

Winning Against Usage

If you’re in this real estate leverage game to win, then you need to understand the rules to win.

Rule #1: Keep your credit score up and your cost of funds down. 

One way to do this is to get credit cards off your personal name and into your business name. This allows you to continue using credit cards for projects, but they won’t impact your score in a negative way.

Keeping your credit score safe allows you to obtain cheaper, easier, and faster funding not only for your business but the rest of your life, too. Don’t let your investing business drive up your cost of living.

Where To Go From Here

If you want to learn more about how to obtain business credit cards you can find some great information on our blog.

Check out other real estate leverage information on our YouTube channel.

You can always send us an email anytime with questions about your credit and real estate investing loans at Info@TheCashFlowCompany.com.

by

Real Estate Investing, Credit Usage, and Your FICO Credit Score

Categories:

How do they come up with your FICO credit score? And why is it such a big deal?

Usage is a big deal when it comes to your credit score.

But it’s not the largest factor in determining your credit score.

Let’s go over what parts make up your FICO credit score.

What Makes Up My FICO Credit Score?

What’s the biggest factor in your credit score? 

Your payment history accounts for 35%.

Are you making payments on time? Are you skipping payments? If so, this will tank your FICO credit score.

If you’re a real estate investor or business owner who does not have a good payment history, then there’s only one thing that can help that: Change your habits. Make all payments on time.

The next biggest factor, at 30% is credit usage. Credit usage and payment history together make up 65% of your credit score.

Here are all the other considerations that go into your FICO score:

  • Credit History: How long you have had credit? – 15%
  • New Credit: How many new accounts and inquiries? – 10%
  • Credit Mix: Do you have a variety of types of debt? – 10%

Pay Attention to Usage

If you’re paying your bills on time, then usage is the largest factor in your credit score.

But how do you keep real estate investment project and your business moving along without being able to use your full credit limit?

One suggestion to this problem is to move those personal cards over to your business. This way, you can still use them, but you don’t have the negative impact on your credit score.

How to Help Your Credit Score

Leverage is king for investors. A major factor in getting leverage and loans is your credit score.

A low FICO credit score is a costly issue for investors.

Check out these other tips to quickly raise your credit score on our YouTube channel.

Send us an email anytime with questions about your credit and real estate investing loans at Info@TheCashFlowCompany.com.

by

Unsecured Lines of Credit for Real Estate: Explained

Categories:

Don’t be afraid. Unsecured lines of credit can be a valuable tool for real estate investors.

0% credit cards scare some people off. When used correctly for a business, however, there’s nothing to be nervous about.

Unsecured lines of credit can be a great tool to lower your cost and open up other forms of lending. In this post, we’ll go over how to successfully use 0% business credit cards and other unsecured credit to gain leverage for real estate investing.

Why We Recommend Unsecured Lines of Credit

At The Cash Flow Company, we’ve used business credit cards for our investments for over 12 years. The people here have used them, we’ve helped other people use them, and we understand first-hand that this is a great tool for investors.

Why are they so great?

Typically, the more money you have to put into a transaction, the better the terms you’re going to get on a loan. When you show that you have other lines of credit (or cash) available, lenders can open up doors that are otherwise closed for you.

When it comes to lines of credit – why pay 20%+ interest rates when there are 0-3% card options available to you?

Let’s look at three ways these credit cards and lines of credit can energize your business.

1. Using for Reserves or Down Payment

If you have unsecured lines, or even 0% credit cards, and move the money over to accounts, then you could use those funds as reserves or a down payment.

The more money you can put in as a down payment, the better your rate, terms, and cash flow will be. Maybe funds from a credit card could allow you to put 10% rather than 5% down. This change could lower your interest rate by 1-2%.

Lenders give better rates to lower loan-to-value deals – especially for bridge loans. Take advantage of this by using unsecured credit to get more money.

2. Saving Money on Interest

Typical interest rates on credit cards are around 19-29%.

Say you put $25,000 on a 24% credit card for an investment project. Over the course of a year, that’s about $6,000 in interest. Multiply that by however many projects you complete in a year, and the costs add up fast.

0% business credit cards just make sense. With these, you can pay $0 in interest for your first year or two, rather than an astronomically high 29%.

3. Protecting Your Credit Score

When you use credit cards on your personal account, the usage negatively affects your credit score. You can’t get great loans from banks and private lenders with a bad credit score.

These 0% credit cards and other unsecured lines should be put under your business name, not your personal name. When you use an LLC, this credit usage comes off your personal credit report.

The Right Way to Use Unsecured Lines of Credit

In real estate investing, you always need money. You have a money bucket that constantly needs refilled. This is just one way to fill it.

Using unsecured lines of credit is perfect for the right investor – someone who can treat the credit like a business.

With unsecured credit, you have to stay on top of it. If you put it on your cards, then you should pay it off when the property sells. 

Using a 0% business credit card to fund your personal life leads to nothing but trouble. Misusing unsecured credit in this way is what gives it a bad name.

Investors who use this method get new credit cards every year with new 0% offers. Many investors use them as a stepping stone for the first year or two of their career. Leaning on credit cards early on eventually gets you the funds to move onto more secured or dependable financing sources later.

How Do You Get 0% Credit Cards & Unsecured Lines of Credit?

Curious about how to use 0% credit cards for your real estate investing business? Fund & Grow has some options for business credit that may be right for you.

If you want to put business credit in your name and get up to $250,000, we have a service just for you. Reach out at Info@TheCashFlowCompany.com for more information.

by

Credit Myth-Busting: Credit Card Usage Percentage

Categories:

Your credit card usage percentage is NOT the amount of debt you owe.

Usage is a percentage based on the amount of credit you have used compared to the amount available. It is not based on the amount of debt you owe.

Two people with the same job, age, gender, etc., can have the same amount of debt, but their credit scores can be completely different.

How does it work?

How Credit Card Usage Percentage Works

Let’s take these two similar people and break down their credit:

  • They both owe $1,000 on credit cards
  • Person A has a credit limit of $1,200
  • Person B has a credit limit of $5,000

It doesn’t matter that they owe the same amount. What matters is that what they owe in relation to their limit.

So:

  • Person A has a credit usage of 83.33% ($1,000 owe/$1,200 limit)
  • Person B has a credit usage of 20% ($1,000 owe/$5,000 limit)

They owe the same amount, but Person A’s usage of 83.33% will negatively impact their score. Meanwhile, Person B’s 20% credit usage percentage will positively impact their score.

How to Avoid the Risks of a High Credit Usage Percentage

So if you can only use 20% of your credit limit before hurting your score… What’s the point of having a credit card at all?

As a real estate investor, the best way to help your score is move your credit card debt to a business card.

The second helpful step is to call your credit card company and ask them to raise your limits. This one trick will automatically raise your score (and lower your usage percentage!).

Other Credit Tips

Check out these other tips to quickly raise your credit score on our YouTube channel.

Send us an email anytime with questions about your credit and real estate investing loans at Info@TheCashFlowCompany.com.

by