We continue our series on FinTech tools that empower real estate investing.
If you didn’t get a chance to read how Acorns lets you stack CASH while you spend! read it now.
This week, we feature CreditKarma.com
Credit Karma is an online portal that updates your credit score in real-time and provides suggestions on how you may improve your score or use your credit to gain access to credit.
Each of us has a credit score, but most of us don’t like reviewing and monitoring it as frequently as we should. You should know what your credit score actually is right now! Preach! Preach! Knowing how to use credit to our advantage is what separates amateurs from the those in the big leagues.
Isn’t your goal to be financially free?
Your credit score without a doubt serves as the measuring stick of your creditworthiness.
Most of us should understand by now, the score is calculated using an algorithm that takes previous payment history into account, overall credit usage to total balance, good and bad standing accounts and other factors.
Think of a credit score as a real-world quasi-equivalent of a grade that measures how well you are doing at honoring your financial commitments.
As far as we know, you do not get any “extra credit” for paying early, only negative marks for paying late or not at all during a 30-day window.
Ideally, you want all your bills to be paid on time and in full every month. Full payment is not required to have a “good” credit score, but on-time payment is.
Who uses credit scores?
Lenders of all sorts use the credit score to check if you qualify for their loan, mortgage, credit card or service products. Even vendors that are not so obvious such as telephone and cable providers check credit as a part of their regular protocol.
If you are ever been refused for a service, recognize that the decision is based on your credit score and is not necessarily a reflection of the lender or company providing the service.
Why does this matter to me? I came to read about real estate!
Real estate investing without access to proper financing can prove to be not only difficult but also slooooow to scale. We’ve talked about previously the differences between having a traditional income to being self employed. As investors we need the banks and loan officers to lend us their money! This is the simple path to fuel your growth in real estate.
OPM (other people’s money!) refers to not just angel investors, but banks too!
A hidden benefit to borrowing funds for real estate and securing a low-interest rate, fixed mortgage is that inflation is a great mortgage destroyer.
During your entrepreneurial journey you may experience the fluctuations of income and business expenses. We understand the challenge, but this is no excuse for poor or neglected credit!
As investors and advocates for financial freedom, we know that we have to take ownership of all areas of our lives. That is why it is important to know your score so you can improve it over the time.
Another important reason for knowing your credit score is to actively monitor for fraud. If you were ever a victim of identity theft, you would want to know it. The only ways to know if someone is misusing your credit is to regularly check the score yourself or register for a subscription service that will monitor it on your behalf. A low-cost or free platform for providing this service would be awesome!
How to check your credit score
Credit Karma is an easy way to check your credit score in real-time and monitor changes as they happen. Because it is an online service, you can use it whenever and wherever you like.
It allows FREE access to your scores and provides financial offers suitable to your credit profile.
One of the best features about Credit Karma is the ability to receive alerts if fraud activity has been noticed on your credit account. Unfortunately, sometimes people don’t realize they have been the victim of fraud until it is too late. We advocate to not let this happen to you! Being proactive is way to stay on the path towards financial freedom.
The reports are really easy to use and understand. Everything is clearly displayed and explained. Your data is well protected and encrypted so no one else can see your personal data. This is all conveniently provided for you in an online website or mobile app!
How does Credit Karma work?
Credit Karma provides free weekly updates on credit scores and reports from national credit bureaus TransUnion and Equifax. After registering with the service, you can use the Credit Score Simulator. This web application shows you what effect potential financial actions can have on your score.
When you are logged in to Credit Karma, you can also check best offers on products that were recommended based on your profile and credit standing. This is particularly useful when searching for a mortgage to finance a primary residence or investment property.
You can compare credit cards, loans, car savings and join the already huge community, including us. Feel free to read their reviews. There are many useful tools including Credit Score Simulator, Home Affordability Calculator, Debt Repayment Calculator, Simple Loan Calculator. With property information about loan rates, you can better forecast your budget to accommodate a new real estate acquisition.
Note, should you decide to pursue one of the recommended products, Credit Karma receives a referral payment from the bank or lender. This is a traditional affiliate marketing program. Don’t let this hinder your focus on the bottom line, or the top score for your sake!
Understanding your credit score is a prudent step when creating your real estate investing business plan. Take control of your credit score today and register with Credit Karma.
Ultimately, people with better credit scores have a lot more liberty in their lives because of easy access to credit. Financial freedom is not always about the amount of money in your accounts, it is also about the ease with which you can access the financial resources you want.