Sometimes you need partners to get deals done in this business. Travis and I talk to people almost daily that want to get involved with real estate but do not have the resources to do it, especially as lending gets tighter. Last year I wrote an article about using partners and how I see many partnerships created for the wrong reasons and of course how those partnerships end in disaster. Well this month I want to stress the importance of partnerships for the right reasons and HOW to do it. Specifically we are going to be talking about credit partners and if this is done incorrectly it could be considered illegal.
Here are some of the most common mistakes consumers make when trying to repair their own credit and some tips on how to avoid them.
1. Closing old accounts
The age of your accounts, types of accounts, and amount of debt used make up a total of 55% of your credit score. When you close an account you remove that account from the equation. Thatâ€™s usually not a good thing.
Do you know the five factors that determine your score in the Credit Game? When playing any gameâ€”if you donâ€™t know the rules you are destined to lose and losing this game can be very costly.
As a young boy I was persuaded to put in a nickel and join in a card game. After my first move one of the other players yelled RENEGE and took my nickel. I was shocked! I lost my money because I did not know the rules of the game and I was mad because I let those guys take advantage of me. Back then a nickel was a lot of money to me and losing that money made a big impression. But that taught me a valuable lesson and that was to be sure that I knew the rules before I entered into any other gamesâ€”especially if they involved money.
I have been helping people abused by the credit card companies for the last 3 years, and people ask me all the time if it is a good idea to take out a mortgage to pay off the credit cards. My answer is be careful if you do, because it might not be your best choice to get rid of the credit cards by taking out a 2nd or 3rd mortgage.