Credit Score and Investing

[Bobbi Martinez]

I attended a seminar last detailed the credit and down payment criteria for investing in real estate. Can someone with less than stellar credit, actually less than good credit (but working on it) secure funding for real estate investments? After last night's lecture it seems unlikely. Any feedback would be greatly appreciated...so thank you, in advance! Bobbi

[Mark Elliott]

hi bobbi. the answer to your question is yes. but with limitations. the power in this business lies with OPM. other peoples money. the more money you borrow, the less of your own you have to invest, the higher your rate of return will be. that being said, yes you can invest without good credit, but it will be harder. you will be forced to deal is smaller amounts, smaller deals, etc. but, that also allows you to make deals on the houses that no one else wants, because those with good credit or money are not buying the houses that on one wants. trust me, i have made and continue to make money buying houses that are the underdog. i personally have bought a house for $500. the most i have paid for a house is $4100. no, i did not forget a zero in there. find a local tax authority in your area, ask them what they do with the houses that are foreclosed on by them for back taxes. chances are, they auction them off to the highest bidder. most of mine have come to me this way. usually, there will be one that no one wants, and you can get for pennies on the dollar. this would work for private owners too. these houses will require you to know a lot of rehab work, but you get a damn good education along the way too. 

ok, lets address your credit. how did it get that way??? thats most important. you know where you don't want to be, now you need to know how you got there. and, quit doing whatever got you there. federal law states that all 3 credit reporting agencies have to give you one free credit report per year. federal law also states that if you dispute anything on that credit report to the agency, they are required to investigate, and remove anything that is either proven to be false or not answered back to them within 30 days. here is what you do. go to www.annualcreditreport.com and request a copy of your report from all 3 credit agencies.  DISPUTE ANYTHING NEGATIVE on those reports. i don't care if it is true or not, dispute it. the agency will request of the creditor proof that this account exists, or whatever you have disputed is true. the creditor has 30 days to answer back. if they do not, the credit reporting agency is REQUIRED BY FEDERAL LAW TO REMOVE THE NEGATIVE INFORMATION FROM YOUR REPORT,  as though it never existed at all. anytime anything negative is removed from your report, your credit score will go up. then keep track of your score at www.creditkarma.com. 

lastly, pay your bills on time. there is nothing better to improve your credit score than paying your bills on time. RE is a great business to be in, and it functions so much better with good credit. you have to get yourself into the " good" category with your credit score for a bank to even give you the time of day. so, get there, and watch yourself grow