Tuesday, July 31, 2012

Commercial Real Estate Credit

The status of your credit plays an important role in helping to obtain financing from commercial real estate. Helps determine the amount of funding for which would qualify and what kind of interest rate you receive on the loan. Unfortunately, most people do not pay attention or monitoring your credit files on a regular basis. If you will invest in real estate, this is an absolute "must".

What is good credit?
Good credit for commercial real estate investor usually means about twelve to fifteen "trade lines" of credit experienced a credit report, with several real estate loans either showing as active or have been paid success. For example, auto loans, current mortgages, and credit cards, at least two years old and show no late payments. Once again, for real estate investors, successful maintenance of real estate loans is a "must".

Now granted, not everyone is perfect (in fact, very few are!) And we all have our ups and downs, so do not worry if you have a few 30 day late payments or collection accounts for some age in your credit report.

Today, credit reporting systems use a complex method of evaluating credit patterns which is distilled and published in a "credit score." The higher the number, the lower the risk exists that a borrower is likely to "default" of a loan.

While this process, called "credit scoring" is in full use of residential loans, commercial lenders are only now beginning to adopt. There is a tendency to use by certain non-bank lenders for loans.

Most subscribers (people who will approve your loan) and underwriting systems to review his record is looking for trends. In other words, they are looking for a story or a recent pattern of good or bad credit. Isolated incidents should not affect your ability to get a loan.

How can you repair your credit?

In most cases, a simple letter or phone call to the credit card company or business that originally gave "credit" can put on the right track to having that "scar" removed from your report. May not even be necessary, however, based on recent credit patterns!

Sometimes it will require you to pay the balance of your debt or send a letter explaining why you were late on your payment. Do not pay any creditor, not to speak with a qualified professional financial adviser or consultant of the first mortgage!

However, if you have a history of recent late payments, you're probably going to have to let time take its course (although there could be a trick or two here can be used).

There are a million scenarios that could review, but I think it's important to walk away with two key ideas of this: 1) Your credit can make or break your ability to acquire a loan and 2) you must know what is in your credit report, credit score, and begin to examine and, if necessary, repair any credit problems immediately.

What role does investment play its history?

Your investment property loan history or "track record" will play an important role in whether a lender will want to finance your next property. Investment properties, and their placements, often considered a greater credit risk than if you buy your own home. Therefore, if you have a proven record of successfully selling properties for investment or management of loans, with no delays in payments, then it is more likely to get the loan approved.

The conclusion is that "credit" or, more precisely, "credit history" is a factor in their ability to finance commercial real estate. Pay close attention to this area of your finances if you intend to be an active investor and manage your credit like one of its properties: an active way.

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