Everything begins with your credit score

You need credit to get a cell phone, to rent an apartment or house, to purchase a car, did you know employers can use your credit history to hire you? Many people due to unforeseen circumstances have a low credit rating.

Unfortunately, as youngsters we were not prepared to protect our credit, assets & family.

Having less than excellent credit can cost you $1,000,000.00 in extra interest rates, fee’s & other unnecessary charges? That 4 out of 5 credit reports have errors in them which in turn will cause you to have lower credit scores? Or that 49 Million people have a 599 or lower credit score?

The majority of individuals think that paying your bills on time will give them the best credit score possible & don’t realize that there are 5 factors that determine your credit rating.

You hear consistently about FICO but what are these 5 factors?

1) Payment History this makes up 35% of the total credit score

2) Credit Utilization this is 30% of the total credit score is based on borrower's credit utilization, that is, there percentage of available credit that has been borrowed.

3) Length of credit history 15% of the total credit score is based of the length of time each account has been open & the length of time since the account's most recent action.

4 & 5 are New credit & credit mix makes up for 10% each.

How does this affect you, the investor?  Many lenders will require a 650 or higher credit score to get decent rates.  However, some will accept less but you will either pay a higher percentage of points up front or a higher interest rate.

There are ways to fix your credit if you are willing to invest the time or you can hire a company to do so for you.  Needless, having a good credit rating not only will save you money but frustration as you grow your portfolio.  Mistakes made in the past will harm you but you can avoid them in the future if you only think ahead of your plan.