How Important is Your Credit Score?
I've noticed that a lot of people on the site come on and ask about how they can get started investing with a poor credit score and if that score even matters in real estate.
I'd argue that it does. I think it makes one heck of a difference, and I believe that because it was just so easy for me to get financing on my first deal. All I did was apply for an FHA loan (a type of financing that probably makes sense for most people applying the "How to Hack Your Housing" strategy, and who also don't have tons of money for a full down payment plus repairs). After one 30 minute meeting, the lender confirmed my income, balances, and credit score - and then gave me a TON of money to buy this property.
Change one variable in that equation, my credit score, and this becomes a nightmare. Nobody would have touched me with a ten foot pole if I had a rotten score. And the funny thing is - I've only been building credit for a little over a year! It's the difference between being able to buy almost any house, and only being able to buy a fantastic deal, AND having to convince private investors to back you. I think my way is MUCH easier, especially when getting started.
From my personal experience, the biggest takeaway I have is that the only thing that really matters with regards to your credit score is not to screw it up!
Maybe this was obvious to everyone already, but thinking about this led me to the following conclusion:
My Credit Score is just as important as my reputation, and should be treated with equal importance.
If you have a bad driving reputation, I would never let you borrow my car! That would be foolish on my part. The only way you could convince me was if you made some sort of demonstrable change and then... stopped crashing! It's the same thing with building your financial reputation.
So what's the fastest way for someone with bad credit to improve their score?
Stop missing bill payments, cut expenses or increase your income, and start paying those bills!
What do you guys think? Is credit score very important in your financial background? Who's come back from a bad score - what did it take?
