Tag Archive for: #credit score

Hard Money Loans and Your Credit Score

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Today we are going to discuss hard money loans and your credit score. Hard money loans are a favorite tool for real estate investors. They offer quick funding and flexibility when time is tight. But what about your credit score? Does it matter as much with a hard money loan?

Here’s the good news: hard money loans focus more on the deal than your credit score. Lenders look at the property itself—the value, condition, and potential. That means you can get funding even if your credit isn’t perfect.

For example, let’s say Sarah wants to flip a property. Her credit score is 640, not great but not terrible. Traditional banks might hesitate, but a hard money lender sees the home’s potential. If the numbers work, Sarah can still get the loan she needs.

However, credit isn’t ignored completely. A better score can help you snag lower rates or better terms. If your score is shaky, some lenders might charge higher interest to offset the risk.

Think of it like this: with hard money loans, your credit score is the backup singer, not the star. The property and the deal take center stage.

Contact Us Today! 

Is your credit score where it should be? Contact us today to find out more about a usage loan and how you can boost your credit score quickly.

Free Tools For You! 

We also have free tools available! Download the Credit Score Checklist now to see what changes you need to make in order to get on the right path.

Learn more!

Visit our YouTube channel to learn more about real estate investing and how you can get on the fast track to success! 

Consider a 911 Loan today!

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How can a 911 loan help you? If you are like most investors, you have used your personal credit cards to keep projects moving along as well as ensuring that business expenses are paid. However, the problem with this method is that the balances on the personal credit cards can drive down your credit score. A lower credit score can result in a higher chance of getting denied for a loan for your next project. It is important to remember that real estate investing is a leverage game. The better leverage you have, the easier real estate investing becomes. 

By using a 911 loan you can pay off your credit cards and other loans that report on your credit report. This will increase your score and in turn create better leverage and loan options for your next project. 

Contact Us Today! 

Are you in the best position for the best loan rates? Contact us today to find out if you need to consider a 911 loan today! 

Free Tools For You! 

We also have free tools available! Download the Credit Score Checklist.

Learn more!

Visit our YouTube channel to learn more about real estate investing and how you can get on the fast track to success! 

Raise your credit score today! 

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Never underestimate the power of your credit score as a real estate investor! Your credit score could easily make or break your next deal. Remember, the best part of real estate investing is that anyone from anywhere can begin building wealth if they know how to use leverage! However, the biggest piece of leverage is an investor’s credit score. Are you setting yourself up for success? Let’s take a closer look at how you can raise your credit score today!

  1. Identify the problem: Are you using a personal credit card to cover business expenses? If so, that will decrease your credit score dramatically.
  2. Usage Loan to the Rescue: A usage loan can be used to pay off credit card debt and in turn raises your credit score.
  3. Open Business Credit Cards: Once your credit score is back on track, get into the habit of using business credit cards to protect your personal credit score long term. 

It’s really as easy as 1, 2, 3! By getting back on the right track with your credit score you will have the flexibility you need to succeed! 

 

Contact Us Today! 

Is your credit score where it should be? Contact us today to find out more about a usage loan and how you can boost your credit score quickly.

Free Tools For You! 

We also have free tools available! Download the Credit Score Checklist now to see what changes you need to make in order to get on the right path.

Learn more!

Visit our YouTube channel to learn more about real estate investing and how you can get on the fast track to success! 

Credit Score Requirements

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Today we will discuss how credit score requirements impact your loan approval. Oftentimes investors wonder whether or not their credit score is killing the approval for a DSCR loan. The answer is yes! One of the biggest factors on credit scores is credit score usage. The credit score usage or utilization rate can greatly affect not only your score, but your ability to be approved for a loan. We recommend that customers use a simulator through MyFico, Experian, or Credit Karma in order to show you how your credit score can change after a debt is paid down. How can you pay down your debt or pay it off entirely? The answer is a usage loan. Keep in mind, you’re not alone! 7 out of 10 investors use their personal credit instead of their business credit. This drives the utilization rate up and investors stress levels up as well! 

Contact Us Today! 

Is your credit score where it should be? Contact us today to find out more about credit score requirements!

Free Tools For You! 

We also have free tools available! Download the Credit Score Checklist now to see what changes you need to make in order to get on the right path.

Learn more!

Visit our YouTube channel to learn more about real estate investing and how you can get on the fast track to success! 

Hard Money: Why You Have Nothing To Fear

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Hard Money: Why You Have Nothing To Fear

Today we are going to discuss why you have nothing to fear when it comes to using hard money. Many believe that hard money lenders are loan sharks who are waiting to take their property from them. However, this could not be further from the truth! Hard money is there for the right investor and for the right property. It can help investors out when other lending options are not meeting their needs. No need to fear! Let’s take a closer look!

What is hard money?

Hard money is based on a hard asset and is not typically based on your income or credit. There is no need to fit into a box either. Hard money is an excellent choice because it may be in a second, third, or even a cross lien on the property. Don’t let the misconceptions prevent you from taking advantage of one of the most flexible lending options available! Just to clarify, a hard money loan is typically referred to as a bridge loan. A bridge loan is a short term loan that is used to quickly get you from where you are to where you’re going quickly. Normally these loans can range from 3 to 12 months.

Flexibility at a better rate!

In many instances, a hard money loan will have a better rate than a traditional loan. This is due to the fact that there is little competition for us as hard money lenders. There are very few people who do this, and there are more people who are looking for hard money. All of the lenders want in return is their money back and the interest on the borrowed amount. Do you need a loan that will fit your unique needs? Hard money loans will provide you not only the flexibility to meet your unique needs, but a better rate as well.

Protection for the investor and the lender.

One of our main goals is to make sure that everyone is protected throughout the process when providing a hard money loan. This includes having loan docs, liens, and everything in between to ensure that it is all written out correctly. Here at Hard Money Mike we also make sure that there is a third party involved in the process. In doing so, it will not only protect the customer, but the lender as well. 

Hard money vs traditional loans.

A traditional loan looks at three factors when investors apply for a loan. These factors include credit score, loan to value, and income. Let’s take a closer look.

Credit Score:

In regards to traditional lenders, if you don’t have a good credit score, you are kicked out. Hard money on the hand doesn’t take into consideration your credit score. Instead, they look at your credit to make sure that you are paying off your debt in a timely fashion.  

Income:

Hard money lenders are also not concerned about your income or if the property is making money. Instead, their main concern is whether or not you have good security for the loan. 

Down Payment:

Another thing we need to take into consideration is the down payment. If you bought a house for $200K, but it is worth $300K, then you got a good deal in the eyes of a hard money lender. Traditional lenders on the other hand are not interested in it being a good deal. They will only lend based on what the property is worth.

Uniqueness:

There are very few lenders who are going to do a second, third, multiple cross liens, or land purchases. Here at Hard Money Mike we call it the 911 credit score. We are giving people a private loan to pay off their credit cards by putting a  lien on a property. This in turn allows them to get their credit score up, and can result in a better loan later on. 

Getting our money back.

Another thing that we need to take inconsideration is whether or not we will get our money back in a timely manner. We don’t want to be involved in a transaction where someone can’t pay us back. This would unfortunately result in a legal process. Therefore, we want to make sure that we set both of us up for success. Keep in mind that as long as you have a good deal, good property, and a good exit strategy, a hard money loan is the easiest loan to get. 

We are here to help!

Hard money loans provide the flexibility you need without having to navigate the rigid criteria of traditional lenders. Contact us today to find out more about hard money and how it can help you get on the path to success. 

Watch our most recent video to find out more about Hard Money: Why You Have Nothing To Fear.

DSCR Loans: Is Your Credit Score Killing Your Approval Rate?

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DSCR Loans: Is Your Credit Score Killing Your Approval Rate?

Many investors wonder whether or not their credit score is killing their approval rate for a DSCR loan. The answer is yes! Here at Hard Money Mike we see a lot of clients who are struggling with their credit scores and need them fixed. It is amazing how many clients are only 1 to 10 points away from either getting a loan or getting better terms. One of the biggest contributing factors is credit score usage. How can you increase your approval rate? Let’s take a closer look.

The importance of reviewing credit score usage.

Here at Hard Money Mike we require that customers use a simulator first. This simulation can be done through MyFico, Experian, Credit Karma, and shows how your credit score will change if credit cards are paid down or paid off. How can you pay off your credit card debt quickly and easily when you are looking at using a DSCR? The answer is a usage loan. Most investors have used their credit cards to make personal purchases, buy information or training materials, or rehab expenses on personal credit cards. In doing so it not only drives up their balance, but it also drives down their score. This usage problem affects 7 out of 10 investors because they are using personal credit instead of business credit. 

Get into a better long term loan today!

First and foremost investors need to address the areas where their credit score is impacting them the most. They can then pay it down by using another loan in order to boost the credit score quickly and easily. By running a simulation first, investors can see the areas that are impacting their credit score the most. Our main goal is to help investors get into a better long term loan. A DSCR loan is based on your credit score and the income made on the property. If your credit score is low, it will in turn affect your income because you are at a higher rate. As a result of the higher rate, it can often kill your approval rate because the amount could go above the break even point. Don’t let low credit scores ruin your chance to succeed in real estate investing. 

What exactly is a usage loan?

A usage loan is a private loan that is secured with a property in order to guarantee repayment. This loan is used to pay off either all or part of your credit debt in order to increase your credit score. Again, this is where the simulator comes into play. It helps us to determine what needs to be removed from your credit in order to increase your overall credit score. Once the credit card statements cycle, the information is reported to the credit bureaus. This is what will impact your score. For example, we had a client in Detroit who was able to drop his DSCR rate by 2 points in a matter of weeks because he was able to increase his credit score. 

Make the move to business credit cards today.

If you are one of the many investors who are struggling with credit score usage, have no fear. Once you get your credit score under control with the usage loan, and get the DSCR loan that you need. After that, you can then begin the switch over to business credit cards. Business credit cards are the same as personal credit cards, however, they do not show up on your personal credit. If you are new to real estate investing it is important to make this process easier and more profitable from the very beginning. This can be done by setting up your LLC, getting business credit cards, and making sure that your lenders are in line. Those who take the time to set themselves up correctly will have lower rates, better terms, and the LTV will get better as a result.

We can help you build wealth by accumulating assets. 

Here at Hard Money Mike we want to help you succeed in real estate investing. Build the wealth you want by accumulating assets today! Higher credit scores will allow you to qualify for the properties you need for your success. Those who are able to accumulate assets at the best rates possible will create opportunities to build their wealth quickly and easily. Is a usage loan right for you? Contact us today to find out more! 

Watch our most recent video to find out more about DSCR Loans: Is Your Credit Score Killing Your Approval Rate?

How to Raise Credit Scores in 30 Days or Less

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Everyone in real estate investing knows the power of credit scores. But how can you raise credit scores quickly so you don’t miss out on deals?

The best part of real estate investing is that anyone from anywhere can begin building wealth if they know how to use leverage.

One of the biggest pieces of leverage in an investor’s toolbox is their credit score.

Your credit score can be the difference between a deal that makes you rich and a deal that puts you in debt. With a good score, you’ll likely find better terms, rates, and points.

However, if you’re struggling with a low credit score, what can you do to fix it? And how long is that going to take?

Identifying the Problem

If you’re using your personal credit card to cover the expenses of real estate investing, chances are you have a usage issue.

Your credit score is calculated based on the balance between two items: 1) available funds, and 2) how much of those funds you’re using (usage). If you’re constantly using all—or nearly all—of the available funds, credit companies see you as a risky investor. This lowers your score.

If this sounds like you, that’s great news! There are fairly painless ways to fix usage issues.

Unfortunately, if your score is low because you’ve struggled with late payments, there is no quick fix for that. Only time can remedy the damage caused by bad payment history.

A Quick Fix to Raise Credit Scores: Usage Loans

A usage loan pays off your credit card, transferring the balance to a private loan that doesn’t report to your credit score.

Many companies and individuals, including us, offer usage loans, and we’re happy to talk about your options at Hard Money Mike.

Usage loans have a near-instant affect on your credit score. You’ll see the change as soon as the next report processes. If you want to see how much your credit score could change if you pursued a usage loan, you can use tools on sites like Experian or Credit Karma.

If your score is low, and you’re convinced that the next deal will fix everything, here’s our advice:

Don’t play credit roulette.

Don’t put your credit score at risk while you wait for the next deal to go through. Get ahead by protecting your credit score with a usage loan.

A Long Term Fix: Business Credit Cards

Once you revive your credit score with a usage loan, what can you do to protect your score long term?

It’s pretty simple: Transfer your real estate investing to business credit cards.

Business credit cards (if you find a good one) won’t report on your credit score. Additionally, because their purpose is different, credit card companies sometimes reward high usage on business accounts even though they penalize private accounts for the same activity.

You still need to pay off these cards on time. But as long as you’re doing that, you protect your personal credit score from jeopardizing your deals.

To learn more about business credit cards or how to find the right one for you, check out our sister company, The Cash Flow Company.

We Can Help

If you want to explore a usage loan or have questions about how to raise credit scores, feel free to reach out to us at Info@HardMoneyMike.com.

We’re always happy to walk you through your options. Our goal is to help you find the right loans and solutions that fit your needs.

Happy investing!

How to Raise Your Credit Score with Hard Money

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If you’re struggling with knowing how to raise your credit score, it might be time to check out a hard money usage loan.

Real estate investing is all about creative wealth using available leverage (other people’s money in the form of bank loans, hard money, etc.) to make a profit. It’s an accessible and lucrative field for first-time investors. 

However, a bad credit score can change the game.

Especially if you’re looking for larger, traditional loans, a bad credit score can immediately disqualify you from consideration.

But there is good news! Hard money (sometimes called “private money”) can save the day. 

The Cost of a Bad Score

A bad credit score (anything below 670 is often considered “poor”) can lower the quality of deals you find. If they do approve you for a loan, a bank will likely ask for an additional 10-20% down. 

You might be stuck with higher rates on a DSCR loan.

At worst, you won’t be approved for a loan at all.

This is both frustrating and very expensive.

How do Credit Scores Work?

Your FICO score is essentially based off of 5 categories:

You’ll notice that the vast majority (over 2/3rds) of the score comes down to just 2 components:

  1. Payment History
  2. Amounts Owed (Usage)

If your score is low because of payment history, then there isn’t much we can do to fix that with a hard money loan. That’s a problem that takes time to resolve.

However, if your score is low because of the usage, hard money can provide a very quick fix that can raise your score in as little as 14 days.

What is Credit Usage?

Credit usage (that Amounts Owed section) measures the ratio of total money you could use with how much you do use. 

Essentially, if you have a total available balance of $1,000 and you’re constantly maxing out that credit card, then you have 100% usage.

Credit card companies typically like to see usage around 30%. If you’re new to the investment game and you don’t have constant cash flow from current properties, it can be really tricky to have optimal credit usage.

How to Raise Your Credit Score Using Hard Money

You can use a hard money usage loan to pay off your credit card. 

This lowers your usage percentage almost instantly which in turn boosts your credit score. Because hard money loans move quickly, you could see your credit score go up in only a few weeks—we’re only waiting for the next statement to be processed!

Once that credit score is back above 700, you shouldn’t have a problem getting your next necessary loan and getting a good deal.

You should also consider opening a 0% business credit card.

The Cash Flow Company encourages moving expenses to business credit cards. This protects those higher real estate investment expenses from reporting on your personal credit score. 

Reach Out if You Need a Usage Loan!

At Hard Money Mike, we offer secure usage loans for investors looking to fix their credit scores.

Also, make sure to check out our free tools. Our loan calculators in particular can help you find the best loan options for your projects. It’s important to shop around as you invest and create wealth.

If you’re looking to raise your credit score fast, reach out to us at Mike@HardMoneyMike.com, and we’d be happy to discuss a deal.

How to Make Real Estate Financing Easier: Simple Way to Raise Credit Score Fast

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Raise credit score fast with this simple investors’ trick.

New and seasoned investors alike prioritize one thing in real estate: financing.

Available, fast, cheap funds are key to a smooth career. And a high credit score is key to smooth financing.

We see investors make one key mistake that wrecks their credit score: they use personal credit cards for business expenses. This one mistake costs people tens of thousands of dollars in quality financing.

Let’s dive into this mistake and see what simple options you have to raise your credit score fast.

How We Help Raise Credit Scores Fast

Just this week we’ve closed two different loans to help clients raise their credit score.

They both needed long-term loans for the rental properties, but their scores were too low from the high usage on their personal credit cards.

We also just had an inquiry from another lender who’s looking for us to help their client pay off his credit cards so he could qualify for their loan.

What Causes a Low Score for Investors?

What causes this issue?

The #1 factor that determines credit score is payment history. On average, investors are responsible about timely payments. So what gives?

The #2 factor deciding credit score is your credit usage. This is the ratio between your current credit balance and your total credit limit. Investors often use personal cards to fund rehab on their projects, which rapidly raises their credit usage.

Let’s talk about the solution.

How to Raise Your Credit Score

If your problem is high usage, there are just a few steps you need to take that will drastically improve your credit score (and financing opportunities).

Firstly, you need to stop using your personal credit cards for business purposes. Treat your investments like a business. There’s no reason fix-up costs should impact your personal finances.

Secondly, get a usage loan to get your personal balances down now. When that money doesn’t report on your credit, your score improves almost immediately.

Lastly, open a business card to use for projects moving forward. Once your credit score is back in a good spot and you have a functioning LLC, apply for a business credit card. Balances on this card won’t reflect on your personal credit.

We’re happy to give you a hand at any step of this process.

How to Move Forward

Leverage is king in real estate. As the markets stay tight, interest rates stay high, and bigger institutions elbow their way into the lending space… Credit score only gets more important.

We don’t want to see a low credit score be the reason you don’t succeed in real estate.

If you need any guidance on your financing journey, don’t hesitate to reach out to us.

Want more info on business credit cards? Check out this video on our YouTube channel.

3 Ways Banks Trap Real Estate Investors in Pricey Loans (and How to Get Out)

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Credit, banks, and real estate investors: 3 traps and how to avoid them. 

As a real estate investor, you always want to minimize costs. This includes the costs of the money itself.

However, banks can trap real estate investors into paying more than they should. You could be paying 1-4% more in rates, 5-10% more on down payments, or could even be denied altogether.

These three traps all come back to what we call the usage circle. Let’s talk about what the usage circle is and how it affects real estate investors.

The Usage Cycle: How Banks Trap Real Estate Investors

Here’s how the usage circle goes:

  • A real estate investor uses their credit cards to keep a project going. They pay for materials, labor, expertise, and more on their cards.
  • They will pay the card off after the real estate transaction. When they close or refinance a deal, they’ll wipe the card back to zero.
  • But while they’re using the card, their credit score will drop. When they pay off the card, their score will go back up.
  • Banks still use the current, low credit score when they give you the loan.

And there’s the trap.

Using credit to buy the stuff that keeps your business going pulls down your credit score. But with a bad credit score, you can’t get the loans to keep your business going.

How Credit Usage Impacts Loans

Usage makes up 30% of your FICO credit score. When an investor is using a lot of their available credit, their score takes the hit.

The difference between a 679 and a 680 score can mean the difference between getting a conforming conventional investor loan or getting declined.

You’ll pay off your credit once you sell or refinance your investment property and your score will go back up. Banks know this, but they can’t take it into account. They have to use your current credit score when you apply – even if it’s only low because of high usage on business costs.

Here’s how banks leave real estate investors trapped in this way.

1. Higher Interest Rates or Loan Costs

If your credit score is down due to high usage, you’ll end up paying an extra 1-4% either on your interest rate or loan costs. On a $400,000 project, this can add up to an extra $4,000 to $16,000 just for one transaction.

2. More Money Down

Banks may require you to put down 5-10% more on a property if your credit score is low. On a $400,000 transaction, this means you’ll have to bring an extra $40,000 out of your pocket. This unexpected cost could prevent you from doing the deal in the first place.

3. Loan Denial

Banks may decline a real estate investor’s loan if their credit score is even just one point below the bank’s guidelines. If you can’t get a loan, you’ll be locked out from getting a rental property, flip, or other investment opportunities.

Solution to the Banks’ Real Estate Investor Credit Problem

The credit score usage trap is real. It happens to almost 80% of the clients that we see.

The solution to avoiding the credit score usage trap is simple: stop using your personal credit cards for business use. If your credit usage is in your business’s name, then it won’t impact your personal credit score.

Here’s the method we recommend.

How to Move Your Credit Usage from a Personal to a Business Credit Card

If you have an LLC set up, you’re already working as a business, and your usage is impacting your personal credit score, then you can move the debt.

You can pay off the credit card balances using a private loan. This usually looks like having a family member or friend provide the funds.*

Then, you let the credit cycle through 30-90 days to allow your score to go back up. Once your score is settled, you can apply for a business credit card and move the balances over.

*If you don’t have someone you can ask for a private loan to do this, reach out to us. We do this type of loan all the time for our clients. We don’t want credit to be the reason you can’t flourish in your real estate investing career.

Stop the Banks’ Usage Cycle Trap for Real Estate Investors

It’s important to choose the right credit card. Some business cards do still show up on your personal credit. Do not choose this card – it defeats the whole purpose!

Not sure which card to pick? We have a link on our website to a business card that we use ourselves and highly recommend. If you get it, we’ll give you $250 off the next loan you do with us.

Tricks and tools like this are what set apart successful investors. Don’t let credit and banks trap you in pricey loans!

Happy Investing.