5 Ways to Improve Your Credit Score before Securing a Commercial Mortgage
One of the most important factors any lender will consider when you apply for a commercial mortgage is your credit score, so it can be nerve-racking to put in your application if you know your score could be better. The good news is that if you do currently have a less-than-stellar personal credit score, there are steps you can take to improve it that will help you secure the commercial financing you need to realize your real estate dreams.
1. Check Your Credit Report for Errors
Any error on your report could be reducing your score, especially if there's an account on there that shouldn’t be, late or missed payments that didn’t happen, or other mistakes that could be reflecting poorly on you. You can receive a free copy of your credit report every year, so order copies from the three credit bureaus, go over them with a fine-tooth comb, and report any errors you find.
2. Make All Your Payments on Time
Paying your bills promptly every month will do wonders for your credit score, so do whatever it takes to ensure you cultivate and keep up this habit. Things you can do include setting payment reminders, signing up for automatic payments, and consolidating bills where possible. People who pay bills in full and on time are seen as less risky, so taking steps to improve this will increase your credit score.
3. Mix Up Your Loan Types
Credit bureaus like to see a decent mix of credit because it generally means you're responsible and can handle multiple types of debt. If you’ve only ever had a credit card, for instance, your score won’t be as high as somebody who has a good credit mix. When possible, apply for other types of loans, such as vehicle, student, home, and personal loans.
4. Pay Down Bills and Debts
If you have any outstanding debts now, pay them off as soon as possible, especially if they're overdue. For one thing, overdue bills will reduce your score, but if your credit utilization ratio is too high, this will also bring down your score.
5. Keep at It
People with short credit histories can't have perfect credit, even if they do everything right. The credit bureaus look for about five years of payment and credit activity before they'll give out high credit scores, so stick with your good habits and, over time, your score will improve. It's also advised that you limit the amount of credit checks that are conducted because each one will impact your score negatively.
Having good credit is like having a key that can open financial doors for you. If you're looking to secure a commercial mortgage and your credit score isn't where it should be, these tips will get you on the path to a better score. And if you’ve already managed to get your score where it needs to be, then apply for your loan today.