Matthew Pillmore joins to share this FlipNerd Expert Tip on how you can get access to business credit that won’t impact your personal credit score or access. Click here to learn more.
Mike: Hey, it’s Mike Hambright from FlipNerd.com, and we have a quick Expert Tip to share with you from Matthew Pillmore who’s going to share a tip on how to get invisible credit.
This Expert tip is sponsored by RealtyMogul.com, B2R Finance, and VirtualStaffNow.com.
Matthew: Invisible credit, sounds intriguing to a lot of people. It can be one of the most powerful tools, and most real estate investors are completely unaware of the potential that comes with these types of accounts. Did you know that setting up an LLC or corporation is an imperative part to your success, not just because of the liability limitation that comes with those entities? But furthermore, because after two years of seasoning, Mike, you can actually acquire invisible credit accounts that are associated with your EIN, Employer Identification Number, versus your Social Security Number.
Now, these are typically business credit accounts, both in the form of unsecured business credit cards and unsecured business lines of credit. Now, the best part about these tools is that nine and a half out of ten times, they will not report to your personal credit report, even though you will be required to personally guarantee it. So be prepared for your Social Security Number to be provided with a strong enough credit score, which is generally at least 680, and typically not recommended to be applied for less than 700.
You can go out and apply for very select, very special types of accounts that are completely liquid to you. And by getting access . . . let me hypothesize. If I only get to access to a $25,000 unsecured business revolving account, which I literally just opened last week, it was stated income, stated asset applications, which means I don’t supply any bank statements, I didn’t supply any tax returns. Now, that’s not always allowed. Sometimes, you’ll need to supply those, be expecting it going in. And with a truthful application, we’re always obviously using the truth, they will base on their decision through gross income that’s stated on the app, credit scores, and at least two years with an LLC or corporation, the ability to give you access to these funds.
Now, if I were to get you a $25,000 worth of unsecured invisible credit lines, you can take that money and put it directly in the bank and season it without it showing up on your personal credit report when your credit is run for your loan application to be approved for a new investment property. So this could be a tremendous source of invisible down payment funds, holding costs funds, fixed up costs funds, emergency reserves funds, or you can use the same accounts to manipulate your current debt-to-income ratios and credit scores in making you more lendable to the lenders and the banks that are thinking of giving you a new mortgage.
So if you have, let’s say, $25,000 worth of auto loans to credit cards, I could take the $25,000 from the unsecured business line of credit, pay off your $25,000 worth of personal debt, thereby driving your credit scores through the roof, minimizing your debt-to-income ratios, and that new $25,000 balance, which is the same amount of debt you had before, is invisible when your credit is run. So it’s one of the single greatest techniques and very rarely known by investors.
Mike: We’d like to thank Colony American Finance, National Real Estate Insurance Group, and Mid Atlantic IRA.
Please note, the views and opinions expressed by the individuals in this program do not necessarily reflect those of FlipNerd.com or any of its partners, advertisers or affiliates. Please consult professionals before making any investment or tax decisions, as real estate investing can be risky.