I was sharing this tip the other day with one of my personal clients, and he said: “Wow, I wish I had known this a couple years ago. I’d be in a lot different position right now.”
So I thought I should share it with you too.
You can use your rehabbing dollars to vastly increase your credit score and your credit limit. Here’s how.
When you are working on a rehab, use any available credit on your credit cards to purchase as much of the supplies as you can – use every available dollar – whether it is $500 or $10,000.
Using the rehab dollars you have in your account, pay off the purchases the very next day.
Repeat the process as many times as you can throughout the project.
What you’ll discover is that within a short period of time, your credit card companies will note the increased spending patterns and increased ability to make payments and they will offer you a higher credit limit.
Once you complete your rehab, you’ll have paid off all of the purchases made for the project, so your card balance will be the same as before (be sure that you continue making your normal monthly payments as well to keep your balance where it should be).
The difference will be that you’ll have a higher credit limit, so your debt to available credit ratio at the pre approval process will be improved resulting in a higher credit score.
A higher credit score will eventually lead to a higher credit limit and you can make even larger purchases on your next rehab to increase your credit limits and your credit score even more.
Fantastic little trick, right?
If you have no available credit on your card, you can still use this tip. Use your rehab dollars to make a payment on your card prior to and for the amount of the purchase. Once the payment posts to your account, make the purchase for the project. (Caution: I would not do this if you are behind in your account as they could decrease your credit limit after you make a payment and you would no longer have those funds available for the rehab).
Enjoy your expanded borrowing power. Just remember, using credit to buy things for yourself – bad. Using credit to buy things that make money – good.
Expect abundance,
Lou Castillo
Disclaimer: I am not a CPA or a Certified Financial Planner. I am not giving you any kind of financial advice, but rather just sharing a tip that has worked for me as an investor over the years.
