What if I have a low credit score or bad credit?

Why is my credit so important?

What is Credit?

• Credit is the ability to borrow money
• Credit is extended through several means, including credit cards, personal car loans, and home mortgages
• Credit is a privilege, not a right
• Using credit can help you reach your goals of home ownership

What is a credit report and credit history?

• Your credit history shows how you have managed your finances and repaid you debts over time
• Your personal credit report begins the first time you apply for credit
• The most important component of your credit report is whether you make you payments on time
• Any time that your credit report shows a late payment, a “red flag” is raised and you may be denied credit or pay more to get it

Why is a good credit history so important?

• A good credit history increases the confidence of those in a position to loan you money
• Lenders are more likely to extend credit again when they see you have paid back your loan when and how you agreed
• The better your credit, the lower the cost of obtaining credit
• If your credit history is not strong, you will probably pay higher interest rates and fees

What are the benefits of good credit?

• Good credit will help you achieve both short-term and long-term goals
• Having the ability to borrow money when you need it can give you flexibility and help you meet your goals
• Trust is a key factor. Lenders are only going to loan you money if they trust you to pay them back
• It’s important for you to understand how credit works, use it wisely and avoid having too much debt

How do you establish a good credit history?

• The key to establishing a good credit history is honoring your promise to repay loans or credit cards as agreed
• Failure to establish and maintain good credit will make it difficult and costly for you to borrow money for your dream home

How do I build credit in order to be ready to buy a home?

• Open your own bank accounts and manage them well
• Never spend more than you have in your bank accounts
• Get a gas/store credit card and always pay your bills on time
• Take out a small loan and repay it monthly in full and on time
• Get a secured credit card linked to a savings account

We have gone over lots of details about credit in this section. Go to Your Real Estate Academy.com and download the notes.

We have a special “Building Better Credit” guide for you to download from Your Real Estate Academy.com.