The American Education Institute

It is not an absolute requirement that you have established credit to buy real estate. You will find that you can still borrow in order to invest even if you have no credit rating at all. Most often, the money you will borrow for what you will buy actually belongs to the sellers. As you are about to learn, even if you now have a bad credit rating or no credit at all, you will still be able to purchase your first real estate investment property. But, of course, if you now have a good credit rating, you will be able to make this purchase much easier.

GO TO YOUR CREDIT BUREAU
You can never have too much or too good credit. You can always use better credit, even if you hold a platinm bank card with a $100,000 line of credit. Chances are good that the interest rate is too high, and you’ll need double that amount anyway to make your next investment.

The techniques described here are not generally those that rely on banks or mortgage companies, but if you ever do want such an institution to do your financing, it will almost certainly rely on your credit reports in deciding whether to lend you any money.

You, like many others in this country, might not even be aware that information about your credit history is gathered and retained by credit bureaus throughout the United States. At the top of which, there are three main credit bureaus acting like clearning houses for information regarding every credit purchaser’s payment habits. Smaller credit bureaus get their reports from one or all three of these “clearing houses.” Potential lenders are able to get copies of those larger reports by contacting their local credit bureaus. The reported information will help them decide if you are a good risk or not. The way they usually see such information is with your own permission. When you sign a loan or credit application, that lender then contacts one of the credit bureaus for a repot on your credit history.

Generally, a credit history report reveals personal as well as other information (i.e., your full name, address, telephone number, job status, and marital situation). Such things, as loan and other credit payment schedules, credit card application, outstanding debts, bankruptcies, and even, pending and previous lawsuit are all contained in your credit report. However, the Statute of Limitations requires that information on you cannot be used if it is more than seven years old. Bankruptcy, however, is an exception to this limitation. If you have ever been legally bankrupt, that information can stay on your record for ten full years.

You should know that credit reporting bureaus do not actually check or verify anything, neither do they make value judgments about any of the information they collect. It is actually up to the individual lending institutions and businesses to decide your credit worthiness, based on criteria of their own. This is why it has become so important to verify the accuracy of your own credit report yourself.

2-14-09
Dr. Eric T. Martin