As a real estate investor, you rely on credit to help you purchase or rehab properties. But have you ever given much thought to how you qualify for the rates you get on your real estate loans?
It all boils down to your credit-building activities, both personal and business. When you use credit wisely, credit bureaus get reports from credit card companies, banks, and other lenders on your activity. This, in turn, will impact your credit score and the rates you’re able to get on financing.
Credit cards can be a part of those credit-building activities. Many assume that the best thing you can do is cut up your credit cards because they can be dangerous.
While certainly, some people don’t exercise good habits when it comes to using credit cards, they actually are useful tools that can help you build your credit and allow you to qualify for great real estate financing offers.
What Using Credit Smartly Looks Like
It’s all too easy to misuse credit cards. That explains why Americans have credit card balances of $893 billion. But you can make credit cards work for you if you’re smart about it.
If you use credit to help you qualify for low interest rates, you are mindful about how much credit you spend, versus what you have available. That’s your debt to credit ratio.
You also make sure to pay your credit card balances on time and in full if possible. This activity is reported to the credit bureaus and can have a significant impact on your credit scores.
You can use business credit cards to cover business expenses while building your credit, and if you qualify, there are some great rewards cards that will give you perks like airline miles and cash back.
Bad Credit? You Still Have Options
Even if your credit scores are low and you’re seeking financing for your next real estate investment, you have options, though they may come with higher interest rates than traditional bank or SBA loans.
If you want to pay lower rates, be proactive about building your credit, and use credit cards wisely to do so.
Ty has been writing about small business and the business finance topics that impact a business' bottom line for almost 20 years. With over 35 years in the trenches as a Main Street business evangelist, author, and marketing veteran, he makes the maze of small business finance accessible by weaving personal experiences and other anecdotes into a regular discussion of some of the biggest challenges facing small business owners today.
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