Credit scores matter less in hard money lending than in traditional mortgages. For real estate investors, lenders focus more on property value and borrower equity. Here’s a breakdown of how credit scores factor into hard money lending decisions.
Credit Scores are not a factor in asset-based hard money loans!
Unlike traditional lenders who rely heavily on credit scores, hard money lenders consider a more holistic approach. CoreLend does not pull credit on short term loans. Your credit score is pulled on only our long-term DSCR loan, but it’s not the sole deciding element and we do not have a minimum credit score. Here’s why:
- Focus on Project Potential: Hard money lenders are more interested in the property’s potential value after renovation (ARV) than your credit history. A strong ARV can outweigh a less-than-perfect credit score.
- Experience and Expertise: Seasoned investors with a solid track record of successful flips or experience managing rentals may be viewed favorably even with lower credit scores.
- Skin in the Game: A substantial down payment demonstrates your commitment to the project and reduces the risk for the lender, potentially mitigating concerns about a lower credit score.
Building Trust and Strength
While credit scores aren’t the be-all and end-all, a strong credit history can still benefit you. It demonstrates responsible financial management and strengthens your overall application. Here are some tips:
- Know Your Credit Score: Obtain a copy of your credit report and address any errors or inconsistencies.
- Strive for Improvement: If your credit score needs work, take steps to improve it before applying for a hard money loan.
Remember: Hard money lenders prioritize the property’s potential and your overall qualifications as an investor.
Ready to explore hard money loan options? CoreLend Financial can help! We offer a variety of financing solutions tailored to your specific investment needs. Our experienced team can assess your project and creditworthiness to determine the best path forward. Contact CoreLend Financial today to discuss your real estate goals and unlock the potential of your next investment.
