How To Use Investments To Boost Your Credit Score
Your credit score is one of the most important numbers in your life. With great credit, you can borrow money for key items or experiences in your life. This might be something like a vacation or something more serious like a home or a medical emergency. So investing is crucial to your strategy. Here is how you can use investments to boost your credit score:
Increase Your Assets
When you invest, whether it is a stock or real estate, your assets grow. This is something that can be legally accounted for and put down on your taxes as well. It also affects your credit, as how a credit score works is largely dependent on your assets overall compared to your debts. So look for key investments that you can make with extra money left over that you have saved from work or windfalls. Depending on on your goals, investing in a rental property is a great way to diversify your investment portfolio while generating passive income. There are multiple types of real estate investment opportunities available, so research your options.
A key component to your credit is collateral. This essentially means items or assets that you can put on the line to back up your credit line or loan. For instance, a house, a car, cash, and other goods can be considered investments that act as collateral for you. They tell creditors that if you run out of money to pay them back, they are going to have some kind of way to recoup their loss. Therefore, always seek to be improving the amount of collateral you have available.
Paying Your Bills
Investopedia explains that there are certain investments that improve your credit in more ways than one. For instance, if you buy a rental property, you are owning an asset that helps your credit. However, when you constantly pay your mortgage down over time without being late, you are building your credit. And when you pay your other bills like utilities on the property this also boosts your credit.
Grow Your Business and Revenue
A business is a great investment if you play your cards right. When your revenue grows, so does the value of the business. For instance, if you improve sales by 20% then you are going to have a more valuable business to creditors.
Keep in mind that business owners are at particular risk of being involved in an employment-related lawsuit. As you grow your business, you should take steps to secure your financial health and assets. Legally Mine cautions “If you get sued and don’t have your assets protected, you can find yourself (and your business) in big financial trouble.” You can work to increase your assets and grow your business, but it will do you little good if you don’t take steps to implement asset protection strategies.
When it comes to getting more out of your investments, you want to make sure you are leveraging them the right way to boost your credit score. While there are a number of ways to do this, the methods above will help you improve it in a shorter time. That way you can have more financial freedom that you deserve now and going forward.
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