Just venting here, and please let me know if I'm missiong some brilliant strategy to prevent this problem from continuing to hurt me: In the last year or two I've turned into a full-time real estate investor. Things are rolling along and going well, but by the mere fact of my higher-than-normal rate of mortgages and subsequent mortgage apps and credit hits, my scores are going steadily down. They used to be in the high 700s, but now I'm getting all of these CRA codes of "number of recent inquiries", etc. Scores are now in the mid to upper 600s, which is starting to push me out of prime lending rates and terms. I have never missed a payment of any kind in my life, and have multiple credit cards, trade lines, equity lines, and mortgages aplenty, yet because I'm not a normal borrower, with one job, one mortgage, one HELOC, one car loan, the evil CRAs are slowly strangling my ability to get new mortgages. My credit report is already a tangled web, with so many mortgages open/closed/transferred/refinanced. I realize that if I just hang out and pay my bills for 6 months without any new inquiries or mortgage apps, my scores will rebound, but 6 months is a long time to not be involved in new deals, and where's the fun in that??? Any insights/feedback would be welcome, even any comments of "shut up and quit whining about scores in the 600s". Thanks!
Do you have a particular lender you deal with for all of your deals? If so, you need to talk to that person (broker) whomever it may be and tell them that the number of inquiries are hurting you. You should be able to find a broker that if you gave all that business to would be willing to find a way to pull softs on you or be willing to write you a letter to have the inquiries removed. My broker was super cool and wrote me letter because my score was checked like 5 times and it was hurting my credit. CRA's will delete in a hurry, even EXP, when you a have a letter stating removal. Give it a shot.
Good suggestion. Unfortunately, I use a variety of lenders and I make it EXPLICITLY clear that I only authorize the credit check as a final condition of loan approval. That is the biggest part of my problem--the inquiries are entirely legitimate, but even one hard inquiry per month for a new loan is dragging me down, and with the low rates of late, I've been doing lots of refis on top of new business. However, often I get hit with inquiries once on the initial submission to underwriting, then possibly another when the automated underwriter reviews it a few days later, then another for final processing approval just prior to loan closing. I could probably get some relief from that by having the lender write said letter to the CRAs requesting the deletion of all but one. Hmmm. Something to think about. Thanks!
What about classifying your real estate business as a corporation and have the loans treated as business loans? There are a lot of tax advantages too.
I have all properties in LLCs, and run my business through a sub-S corp, but they still require personal guarantors on the loans, so I'm still tied into it all. I am almost to the point where the businesses can stand on their own, with financial histories to support the loan applications, but I've yet to find a lender that will actually lend to the corporation instead of the individual. I've heard of "credit scores for the business", but I don't see how that could work without still being tied to the individual. I can get lines of credit for the businesses, but still, always tied to me personally and my credit score. Insights on that, anyone?
re: credit scores for businesss...have you opened a Dun & Bradstreet credit file for your business? I believe that might count for something in creating a business credit score for you... Poochie
